On the Rebound

Despite daunting challenges in the second quarter, the Chinese economy registered growth and expanded 2.5 percent year on year in the first half of this year, a testament to its resilience amid headwinds.

Given complex developments on the world stage and Omicron flareups at home, major economic indexes dropped in April. China’s effective management of COVID-19 resurgences and the implementation of measures targeting economic bottlenecks, such as ensuring uninterrupted logistics services across the country and supporting small and medium-sized enterprises, have both helped reverse the downturn pressure.

Data released by the National Bureau of Statistics in mid-July painted the picture of an economy that has increasingly regained its footing. The value-added industrial output has returned to an upward spiral with year-on-year increases reaching 0.7 percent and 3.9 percent in May and June respectively, following a 2.9-percent decline in April. The purchasing managers’ index for the manufacturing sector has also risen above the boom-or-bust threshold of 50 percent, a sign of growing confidence.

Retail sales of consumer goods were up 3.1 percent year on year in June, following drops in the previous three months. Recovery is expected to continue as China is on a trajectory of consumption expansion and upgrading. Foreign trade has been on the rise since the beginning of the year despite an unfavorable international trading environment and COVID-19’s impact on industrial and supply chains. Trade in goods, in particular, jumped 9.4 percent year on year from January to June.

As it aspires to move up the industrial ladder, China is fostering new growth drivers. In the first six months,the value-added output of leading hitech manufacturing enterprises grew 9.6 percent year on year, while investment in the hi-tech industry soared by 20.2 percent. Meanwhile, consumer prices grew moderately. Employment has improved,with the surveyed urban unemployment rate standing at 5.5 percent in June, down from 5.9 percent in May.

Last, but not least, China has reaped a bumper summer harvest. The output of wheat, a staple crop, edged up 1 percent over the previous year, guaranteeing the country’s food security.

At a time when risks of global economic stagflation mount and COVID-19 lingers, the fundamentals of China’s economy remain unchanged. BR