China became the first major economy to grow since the start of the coronavirus pandemic, recording an unexpectedly strong 3.2 per cent expansion in the latest quarter after anti-virus lockdowns were lifted and factories and stores reopened.
Growth reported Thursday for the three months ending in June was a dramatic improvement over the previous quarter’s 6.8 per cent contraction – China’s worst performance since at least the mid-1960s. But it still was the weakest positive figure since China started reporting quarterly growth in the early 1990s.
“We expect to see continuous improvement in the upcoming quarters,” Marcella Chow of JP Morgan Asset Management said in a report.
China, where the coronavirus pandemic began in December, was the first economy to shut down and the first to start the drawn-out process of recovery in March after the ruling Communist Party declared the disease under control.
“The national economy shifted from slowing down to rising in the first half of 2020,” the National Bureau of Statistics said in a statement.
Economists say China is likely to recover faster than some other major economies due to the ruling Communist Party’s decision to impose the most intensive anti-disease measures in history. Those cut off most access to cities with a total of 60 million people and suspended trade and travel – steps later imitated by some Asian and European governments as the virus spread.
Manufacturing and some other industries are almost back to normal. But consumer spending is weak due to fear of possible job losses. Cinemas and some other businesses still are closed and restrictions on travel stay in place.
Forecasters warn exporters are likely to face another decline in demand as sales of masks and other medical supplies taper off and US and European retailers cancel orders.
“This suggests sustained pressure on employment, currently the government’s foremost policy priority,” said JP Morgan’s Chow.
A potential stumbling block is worsening relations with the United States, China’s biggest national export market, over disputes about trade, technology, human rights and Hong Kong.
The two governments signed an agreement in January to postpone further tariff hikes in their fight over Beijing’s technology ambitions and trade surplus. But most increases already imposed remained in place.