Chinese economy's V-shaped recovery becomes more prominent from buzai232's blog

China's economy, as shown by multiple mid-year indicators, has ridden out its downturn due to COVID-19 strains and bounced back to growth in the second quarter (Q2). Economists believe that the country's V-shaped recovery is only getting started.To get more China economy news, you can visit shine news official website.

In Q2, China's gross domestic product expanded by 3.2 percent year on year, reversing a 6.8-percent contraction in the previous quarter. China's fiscal revenue marked the first expansion this year by gaining 3.2 percent year on year in June, while the contraction of the retail sector declined markedly.China's economy has gradually emerged from the slump and returned to the level it was roughly at prior to the outbreak, backed by the stimulation that has delivered burgeoning signs of work resumption, industrial chains and services sector," said Shao Yu, chief economist at Orient Securities.

Latest data showed that the purchasing managers' index (PMI) for China's manufacturing sector rose to 51.1 in July from 50.9 in June, remaining in expansion territory for the fifth month in a row, indicating stronger confidence of market entities.

"The steadily firming recovery points to the effectiveness of China's epidemic prevention and pro-growth policies to boost production and domestic consumption," said Sheng Hai, a macro analyst with China Industrial Securities.

His point was echoed by Steven Zhang, chief economist at Morgan Stanley Huaxin Securities. "China has its institutional advantages that enable a more agile and rapid response to public safety emergencies like COVID-19."The prompt introduction and implementation of an array of measures, including higher fiscal spending, tax relief and cuts in lending rates and banks' reserve requirements to revive the economy and support employment, according to Zhang, is one of the major reasons behind the Q2 positive growth.

As recent data showed that China's imports from emerging countries increased significantly, the recovery of the world's second-largest economy is expected to boost the pace of other economies' restoration, according to Zhang.

In H1, China's trade with ASEAN went up 5.6 percent year on year to 2.09 trillion yuan (about 301.12 billion U.S. dollars), while that with countries along the Belt and Road (B&R) accounted for 29.5 percent of the total trade, up 0.7 percentage points year on year.

Zhang said that trade between China and other parts of Asia, B&R countries and ASEAN is expected to further expand as the spillover effects will be more notable due to shorter distance and lower logistics costs.To mitigate the impact of the COVID-19 outbreak, China has been investing heavily in infrastructure projects through local government bond issuance, which is expected to buoy demand for bulk commodities in the global market, thereby benefiting B&R countries, as major bulk commodity exporters, Zhang noted.

"Such effects came in as a demonstration of the new development pattern, or 'dual circulation', proposed in last week's meeting of the Political Bureau of the Communist Party of China Central Committee, which underscores the domestic market as the mainstay while domestic and foreign markets can boost each other," said Zhang.