China first major economy to return to growth since coronavirus shock, but doubts remain about second half outlook
- Chinese economy posted better-than-expected growth of 3.2 per cent in the second quarter from a year earlier, led by industry and infrastructure spending
- But a number of economists expect the economic recovery to plateau in the third quarter on continued subdued consumer spending and weaker exports
China on Thursday became the world’s first major economy to report positive economic growth after the coronavirus shock, although major questions remain over whether the momentum seen in the second quarter will continue in the second half of the year.
On the surface, the world’s second biggest economy posted an impressive rebound in the April-June period, underpinned by improvements in industrial output, retail sales and fixed-asset investment. But the outlook is clouded by escalating confrontation between China and the United States, risks of a “second-wave” outbreak of the pandemic, a weak jobs market and disruptions by summer floods.
However, the Shanghai composite stock index, the benchmark of China’s onshore stock market, plunged 4.5 per cent on Thursday, on fears the government would enact more measures and tighten monetary policy to cool off the recent sharp rise in the market.
Our tracking of the economy showed that most businesses were not operating at full strength – especially in the services industries. So we find it very hard to see how the economy could have grown
Even after the release of the new gross domestic product (GDP) data, doubts remain about the state of the Chinese economy.