Economy shows better-than-expected rebound; 2-3% full-year growth seen
Approaching the end of the second quarter, the Chinese economy continued to show promising signs despite a recent outbreak of coronavirus in Beijing, as retail spending improved during the Dragon Boat Festival holiday and China’s unemployment rate edged down in May.
Some economists are predicting that second-quarter GDP will grow about 2 percent due to higher consumption and recovering production.
According to data released by major Chinese e-commerce platforms, consumption, especially of some festival-related food, has surged during the recent Dragon Boat Festival holiday.
For example, sales of zongzi with salty egg yolk and meat stuffing surged 437 percent year-on-year from June 1-21 on Alibaba’s tmall.com, while sales of sticky rice doubled, according to data sent by Alibaba to the Global Times. The holiday ran from Thursday to Saturday.
On JDDJ, Dada Group’s local on-demand retail platform, sales increased more than 10 times on a yearly basis in third- and fourth-tier Chinese cities on the eve of the Dragon Boat Festival.
Chinese e-commerce giants JD.com and pinduoduo.com also said sales by volume of fruit, beef and lamb surged by more than 150 percent year-on-year during this Dragon Boat Festival holiday, according to media reports.
Transactions by China UnionPay during the holiday rose 4.7 percent to 952.1 billion yuan ($134.5 billion) compared with the first three days of the May Day holiday and 9.2 percent compared with the three-day Qingming Festival holiday.
Liu Xuezhi, a macroeconomist at Bank of Communications, said that China’s consumption recovery has been “evident” and “promising” since March.
“Consumption has recovered to about 70 percent of last year’s level, and the sector should soon bounce back to positive growth,” he told the Global Times on Sunday. Retail sales fell 2.8 percent in May.
Other sectors also showed promising signs. For instance, the surveyed unemployment rate stood at 5.9 percent in May, down 0.1 percentage points from April. Industrial added value was up 4.4 percent in May, compared with a gain of 3.9 percent in April.
Zhang Yi, CEO of Guangzhou-based iiMedia Research, said that China’s economic recovery has been faster and better than market expectations several months ago, when the coronavirus first broke out.
“It shows the solid foundations of the Chinese economy, reflected by innovation, abundant job categories, accommodative policies and high savings rate, which can help China offset pressure at critical times,” Zhang told the Global Times.
Liu said GDP might grow about 2 percent in the second quarter, and full-year growth would be between 2-3 percent. Zhang made a similar forecast.
But experts said that it would be harder for some sectors, such as tourism, to recover, and these industries would drag on the economy as a whole.
A report sent by domestic tourism website ctrip.com to the Global Times showed that tourism revenues grew for the Dragon Boat Festival holiday compared with same period in May, but the growth rate slowed down compared with the Qingming Festival and May Day holidays.
Liu said that it will be hard for the tourism sector to return to pre-coronavirus levels this year, but demand will revive once the pandemic is eliminated.
Zhang stressed that the most difficult business sector this year would be trade, as foreign demand has been ravaged by the pandemic. “But the situation isn’t as bad as we thought, as many trade companies are already shifting to the domestic market with help of the internet,” he said.
Tourists appreciate the lotus blossoms at the Zijingshan Park in Zhengzhou, central China’s Henan Province, on June 27, 2020, the last day of the Dragon Boat Festival national holiday.Photo:Xinhua
