China's GDP likely expanded 2-3% in Q2
Supply-side indicators suggest positive outcome for Q2
Published: Jul 15, 2020 11:23 PM

A production line of a machinery factory in East China's Jiangsu Province on July 5, 2020 Photo: cnsphoto

High-frequency data such as industrial power consumption and raw steel production are pointing to a stronger June industrial performance that could result in the Chinese economy returning to positive territory with a growth rate of 2-3 percent in the second quarter, Chinese analysts said Wednesday. 

China is due to release economic numbers for the second quarter and the first half Thursday, after posting better-than-expected export data Tuesday.

Recently released figures for power generation, raw steel output, excavator sales, railway cargo and express deliveries all pointed to active growth, prompting a report by financial news site, which said that a positive figure for second-quarter GDP is "a large probability event."

China's average daily raw steel output in mid-June was 2.14 million tons, up 3.73 percent year-on-year and the highest in 10 years.

Excavator sales in June, boosted by a special-purpose bond induced infrastructure binge, rose 63 percent year-on-year, according to


Analysts reached by the Global Times tended to agree with the assumption of growth, with an average forecast of 2-3 percent for the second quarter.

"The data point to stronger June growth in industrial value-added and add momentum to a recovering trend established in April and May, roughly reaching pre-virus levels," Liao Qun, chief economist at China CITIC Bank in Hong Kong, told the Global Times.

Industrial value-added grew 3.9 percent in April and 4.4 percent in May, compared with a decline of 8.4 percent in the first quarter.

Although positive signs are seen on the supply side, Liao said that on the demand side, the recovery is weaker, with retail sales and capital investment unable to reverse declines. 

Taking these figures into account, Liao estimated that the Chinese economy may have grown 2 percent in the second quarter.

Liu Xuezhi, a macroeconomics expert at the Bank of Communications, told the Global Times Wednesday that a 3-percent increase for the second quarter seems likely.

"It is possible that a better-than-expected result will be released on Thursday, but GDP landing in the range of 0-3 percent also aligns with people's expectation."

Retail sales, a major driver of GDP, contracted 7.5 percent in April and 2.8 percent in May.

Fixed-asset investment fell 10.3 percent in the first four months and 6.3 percent in the first five months.

In the first quarter, the Chinese economy shrank 6.8 percent amid the height of the coronavirus pandemic, the worst reading since such data was collected.

Analysts noted that it would be a hard-won achievement for the Chinese economy to show positive growth in the second quarter, thanks to the government's effective containment of the pandemic and economic reopening efforts.

According to the IMF's latest forecast, China might be the only major global economy to grow this year, perhaps at a rate of 1 percent.

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