China Presents Mixed Picture of COVID-19 Recovery
By Gina Lee
Investing.com – China presented a mixed picture of its recovery on Friday as it reported industrial production and retail sales data for April.
Industrial production increased 3.9% year-on-year, beating analyst forecasts of a 1.5% increase prepared by Investing.com.
Meanwhile, retail sales slumped 7.5% year-on-year, against predictions of a 7% decrease.
In spite of the improvement, the Chinese economy “hasn’t returned to normal level,” National Bureau of Statistics spokeswoman Lui Aihia said. There are “pent-up demand effects” in the data improvement, she said.
Investors were watching the release of Chinese data to see whether China had managed to restart its economy following the loosening of a weeks-long lockdown to curb the spread of the COVID-19 virus.
“The data is in line with the overall trend that supply is stronger than demand and the recovery is mainly driven by supply,” Larry Hu, Chief China Economist at Macquarie Group (OTC:MQBKY), told Bloomberg.
“Looking ahead, China’s economy will face strong headwinds in the next few months if demand remains weak. The 6% jobless rate understated the current situation.”
As China fights new clusters of outbreaks feared to be a second wave of cases, investors will have to wait to see the signs of economic recovery.
“Policy makers will likely find the recovery progress acceptable for now, as reflected in the PBoC holding off MLF rate cuts today,” Michelle Lam, Greater China economist at Societe Generale (OTC:SCGLY) HK, told Bloomberg.
“But the biggest uncertainty remains the extent and the duration of the external demand shock. The risks remain to the downside, pointing to more stimulus to be revealed in next week’s NPC.”
Meanwhile, U.S. President Donald Trump added fuel to the simmering U.S.-China tensions fire, saying overnight that he did not wish to speak with Chinese counterpart Xi Jinping and threatening to cut ties with Beijing.
