China’s GDP rebound puts spotlight on the US

By Wang Cong Source: Global Times Published: 2020/7/16 17:18:41

Consumers shop for imported milk podwer at a business center in Kunming, Southwest China's Yunnan Province. File photo: VCG

On Thursday, China emerged as the first major economy to return to growth since the global coronavirus pandemic and shifted the spotlight to the US, which continues to struggle to contain the deadly virus and get the world's biggest economy back on track. The world had been focused on and scrutinized China's response to the pandemic and ability to boost its economy.

The Chinese economy grew 3.2 percent year-on-year in the second quarter of 2020, beating expectations and rebounding from a historic 6.8 percent contraction in the first quarter, when the epidemic brought much of the country to a near standstill for weeks.

Although the 3.2 percent growth is still among some of the slowest paces seen in the world's second-largest economy, which recorded a 6.1 percent growth in 2019, the rebound made clear that China is on a steady path to recovery from the fallout of the pandemic, while many major economies, particularly the US, continue to struggle, Chinese economists noted.

While China has been unsubstantially blamed by US officials for the economic ravages stemming from the pandemic, it is the US that now poses the biggest threat to the recovery of the global economy, said Cao Heping, a professor of economics at Peking University.

"It is impossible for the US economy to return to growth anytime soon," Cao told Global Times on Thursday, noting that the US is facing multiple crises, including an "out-of-control" epidemic, "chaotic" governance and social unrest over the death of an African American male in police custody. 

In the first quarter, the US economy recorded an annualized 5 percent decline. But many expected the serious trouble would start in the second quarter, in line with the pace of the spread of the virus in the country. 

US GDP growth could contract by 30 percent at an annualized rate in the second quarter and 5 percent in 2020, according to US financial institution Pacific Investment Management Co on April 8. The US is scheduled to release GDP data for the second quarter on July 30.

The IMF said in its latest World Economic Outlook released in June that US GDP is expected to decline by 8 percent in 2020, compared to an estimated 1 percent growth in China.

"Second quarter is out of the question [for GDP growth]. There were some talks about recovery in the third quarter, but even that has been clouded by the worsening epidemic. Now, the hope for a fourth quarter GDP growth is slim," Guan Tao, chief global economist at BOC International (China) Co and a former senior official at the State Administration of Foreign Exchange, told Global Times on Thursday.

Guan said that the US is on a "completely wrong" path for economic recovery, as officials are calling for work resumption prematurely and even launching attacks on science.

As of Thursday, the US has about 3.48 million cases of coronavirus infections and 138,000 deaths. Adding to the problem is a whopping 11.1 percent unemployment rate in June.

Posted in: ECONOMY

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