China GDP rose by 3.2% in the second quarter of the year compared to a year ago, as lockdowns ease and stimulus measures shore up the economy.
The increase in China GDP surpassed analysts’ predictions and proved a rebound from the first quarter’s contraction.
The sign of improvement comes as authorities loosen lockdowns imposed to curb the coronavirus outbreak in China and roll out stimulus measures to aid its economy.
According to economists consulted by Reuters, gross domestic product would have risen at a modest pace at 2.5% in the April to June quarter.
China’s first quarter GDP saw a 6.8% contraction in 2020 from a year ago as the coronavirus outbreak hit one of the world’s largest economies. This was the first GDP decline the country experience since at least 1992, when official quarterly records began.
While official GDP figures determine the buoyancy of the world’s second-largest economy, experts are skeptical about the accuracy of China’s GDP reports.
“Generally speaking, the national economy overcame the adverse impact of the epidemic in the first half gradually and demonstrated a momentum of restorative growth and gradual recovery, further manifesting its development resilience and vitality,” said China’s National Bureau of Statistics in a press release.
Fiscal spending and cuts in lending rates and banks’ reserve requirements are among the measures introduced by the Chinese government to improve the economy.
Economic recovery in China
Based on trade numbers in June, China’s dollar-denominated exports and imports increased. There was also an expansion in China’s manufacturing activity in June compared to May, based on two different sets of surveys.
Chinese exports have been acquiring “massive market share” while the rest of the world hardly had any movement, according to Bo Zhuang, chief China economist at TS Lombard before the data release.
China began loosening lockdown measures relatively earlier than other countries.
Zhuang predicts that China can sustain its GDP recovery in the next two quarters at least, since the local economy appears “fine” with adequate activity in infrastructure and cross-provincial travel reopened.
Zhuang told CNBC that a recovery of about 5% in the next two quarters is “definitely foreseeable.” China recorded a 6.1% full-year GDP growth in 2019.
In April, data from the National Bureau of Statistics of China showed that the first quarter GDP contracted by 6.8% in 2020 from a year ago.
Analysts consulted by Reuters gave forecasts for China, saying its economy, particularly its GDP, would decline by 6.5% in the January to March quarter, compared to a year ago.
These predictions from 57 analysts varied from a 28.9% contraction to a 4% expansion. China’s economy rose by 6% in the previous quarter, from September to December 2019.
Challenges
However, China still faces some challenges, and its statistic bureau recognized the risks.
“Given the continuous spread of the epidemic globally, the evolving huge impact of the epidemic on the global economy and the noticeably mounting external risks and challenges, the national economic recovery was still under pressure,” it said in the press release.
The global economy may fall into recession this year as several governments have imposed lockdowns and restricted business activity and public gatherings. Slowing growth in global demand can affect Chinese exports.
This year, China announced that it would not set a GDP goal due to uncertainties brought by the pandemic.
The coronavirus outbreak has already infected over 13.5 million people globally and killed more than 582,000 people, based on the latest data compiled by Johns Hopkins University.
