China’s economy saw a sharp decline in growth in the first three months of the year during unprecedented coronavirus lockdowns when the GDP plummeted by 6.8 per cent.
China’s gross domestic product expanded 3.2 per cent year on year in the second quarter of 2020, the country’s National Bureau of Statistics (NBS) said on Thursday.
In the first half of this year, the country’s GDP stood at 45.66 trillion yuan (about $6.53 trillion) amid COVID-19 impact, down 1.6 per cent year on year, according to NBS data.
A breakdown of the data showed the output of the primary industry rose 0.9 per cent year on year, while the service sector and the secondary industry saw a decline of 1.6 per cent and 1.9 per cent, respectively.
Thursday’s data showed China’s job market improved slightly in June, with the surveyed unemployment rate in urban areas standing at 5.7 per cent, down 0.2 percentage points from the previous month.
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NBS spokesperson Liu Aihua said it has been not easy for China to contain the COVID-19 pandemic in a short time and reverse an economic downturn.
“Given the continuous global spread of the virus, the evolving impact of the pandemic on the global economy and the noticeably mounting external risks and challenges, China’s economic recovery is still under pressure,” Liu said in a press conference.
Liu said she expects China’s economy to continue recovering in the second half of the year powered by the steady economic recovery in H1, rapidly growing new industries and business models, as well as the strong support from macro policies.
Judging by the official data, analysts say it is a turnaround of sorts for the world’s second-largest economy, which is the first one to recover from the coronavirus crisis without the hassles of lockdowns experienced by almost all countries in the world.
As it came out from the coronavirus crisis in March-April, China cashed on growing COVID-19 demand for medical equipment from all around the world by exporting billions of dollars’ worth of materials.
Analysts, however, predict it would be an uphill climb for export-reliant China’s economy going forward as it faced intensified conflict with the US and the negative fallout on its external trade due to Beijing’s increasingly aggressive policies towards India, Hong Kong, Taiwan and the South China Sea resulting in bans of its products and services.
China’s GDP took the worst hit since the disastrous Cultural Revolution in 1976, plummeting by 6.8 per cent in the first quarter of 2020 as the country took unprecedented measures to fight the coronavirus pandemic that brought the economy to a standstill.
On a slowdown mode, China’s economy grew by 6.1 per cent in 2019, the lowest annual growth rate in 29 years amid the bruising trade war with the US but it remained above the psychologically important mark of six per cent.
The GDP in 2019 expanded to $14.38 trillion from $13.1 trillion in 2018.
Considering the global and domestic uncertainties and the continued slowdown of the economy, the Chinese government in a rare decision has not fixed GDP target for this year.
“The second-quarter performance was better than expected, as production on the supply-side picked up and investment caught up,” Tian Yun, vice director of the Beijing Economic Operation Association, told the state-run Global Times.
“The economy in the latter half of the second quarter moved from post-virus recovery to periodic climbing up to a certain extent,” Tian said.
China’s Q2 figure is higher than experts were predicting and points towards a V-shaped recovery – that is, a sharp fall followed by a quick recovery, a report said.
It also means China avoids going into a technical recession – signified as two consecutive periods of negative growth.
A technical recession is defined as two consecutive quarters of contraction in GDP.
China’s growth could also lend credibility to Beijing’s claims that its approach in containing the outbreak, including draconian control over people movement and massive testing, provides the right balance between economic growth and pandemic control, Hong Kong-based South China Morning Post reported.
As per NBS data, China’s retail sales of consumer goods declined 3.9 per cent year on year in the second quarter of this year.
The figure narrowed 15.1 percentage points from the first quarter.
China’s surveyed unemployment rate in urban areas stood at 5.7 per cent in June, 0.2 percentage points lower than that of May.
A total of 5.64 million new urban jobs were created in the first half of 2020, completing 62.7 per cent of the annual target.
Also, China’s fixed-asset investment went down 3.1 per cent year on year in the first half of 2020, narrowing from the 6.3-per cent decline in the first five months.
The total fixed-asset investment came in at 28.16 trillion yuan (about $4 trillion).
China’s value-added industrial output, an important economic indicator, went up 4.4 per cent year on year in the second quarter as factories stepped up production amid COVID-19 control, the data said.