Economy heads for annual expansion amid epidemic
China's commodity sales rise for the first time this year
Published: Aug 14, 2020 10:03 PM

Port/economy Photo: Xinhua

A slew of July economic data showed a steady recovery for the world's second largest economy, which points to an annual expansion despite a global economic recession amid the COVID-19 pandemic.

Thanks to the growth of industrial enterprises above designated size and improving consumer demand in July, China's economy has witnessed a steady recovery, according to Fu Linghui, spokesperson of the National Bureau of Statistics (NBS).

Even if China's retail sales in July contracted by 1.1 percent year-on-year, it is the first time for commodity retail to grow within the year.

Commodity sales in July rose 0.2 percent to 3.22 trillion yuan ($460 billion) from the same period last year, which showed that consumption is on course to continue its recovery from the pandemic. 

The reopening service industry drove up consumption in catering and the accommodations sectors, said NBS statistician Zhang Min, adding that the restaurant industry has recovered almost 90 percent of the level prior to the pandemic. While revenue in July was down 11 percent from the same time last year, it closed the gap by 4.2 percentage points. 

Chinese consumption was inhibited by the second wave of coronavirus cases in certain cities, as well as floods in South China in July, Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times. 

"It is likely that in the second half, consumption will only slightly recover, given the uncertainties around the pandemic, rather than a V-shaped rebound," Cong noted.

July manufacturing activities continue to recover, with the large industrial enterprises' added-value growing for four consecutive months. Last month's manufacturing activity bounced back to an expansion, as reflected by the purchasing managers' index reading of 51.1, and the industrial added-value rose 4.8 percent, NBS said. 

For instance, as an indicator of the country's manufacturing activities, excavator sales in China last month surged by 54.8 percent to 19,100 units, China Construction Machinery Association data showed. 

In addition, fixed-asset investment in infrastructure, high-tech and people's livelihood industries grew. 

July's fixed-asset investment saw a 4.85 percent growth from June, partly fueled by the country's new infrastructure boom, said Cong. He said that looking into the second half, the contributions of investment to the economy will be more evident. 

Analysts said China's economy continued to recover in July, following the trend of the second quarter, while also signaling a stronger growth momentum in the second half. "China could achieve positive growth this year based on the trend," Cong noted.

However, challenges and difficulties remain, the NBS official said on Friday. 

The 5.7 percent urban unemployment rate still indicated a grim job situation in the country. According to a report by Chinese job hunting platform Zhilian Zhaopin, 26.3 percent of China's graduates were still looking for a job in June, up 4.4 percentage points year-on-year. 

Liu Xuezhi, an economist at the Bank of Communications, told the Global Times Friday that economic growth is expected to pick up in the third quarter.

Consumption is expected to pick up gradually, but will not increase significantly, he said.

"The biggest risk to the economy is external uncertainty. But since the second quarter, trade conditions have surpassed market expectations," Liu said, adding that a full-year economy will show a trend of from low to high, and the focus of the second half of the year will be on the implementation of macro policies.

Fiscal policies have become more proactive and effective, and local special debt and special treasury bonds to fight the COVID-19 pandemic will be implemented as soon as possible. Monetary policy will be more flexible and appropriate to spur the financing of the real economy, Liu said.