China’s economy shows signs of recovery | Daily News


China’s economy shows signs of recovery

China’s major economic indicators showed modest signs of recovery in April from record lows earlier in the year as the country shook off the impact of the coronavirus epidemic and business activity picked up, official data showed Friday.

Fixed-asset investment declined at a much more moderate pace last month and industrial output bounced back into expansionary territory for the first time this year, reports released by the National Bureau of Statistics (NBS) show. Although retail sales continued to decline on a year-on-year basis, the pace of the drop was less than half that of March.

China’s economic growth was already slowing before the coronavirus outbreak started spreading across the country in January. But activity collapsed in February and early March as government efforts to contain the spread of the coronavirus shuttered businesses across the country. With the epidemic now largely under control inside the country, economic activity is recovering and domestic supply and demand are improving. But the country is now at risk of a second shock as overseas demand slumps and disruption to global supply chains hits production.

The government has repeatedly expressed its concern about the economic recovery and pledged to continue supporting companies struggling to resume normal business operations. Although policymakers have announced a raft of monetary and fiscal measures to aid the corporate sector and support low-income households, many economists expect further measures will be unveiled during the delayed annual meeting of the National People’s Congress (NPC), the country’s legislature, which starts on May 22. The gathering will also approve China’s main economic policies and targets for this year, including the goals for gross domestic product (GDP) growth and the budget deficit, which have yet to be formally announced.

“We expect the much-awaited NPC meeting to set a clearer easing policy stance for the rest of the year, albeit with the government de-emphasizing GDP growth target significantly,” UBS AG economists led by Wang Tao wrote in a note Friday. “For policy and target details, we expect a higher fiscal deficit and special local government bond issuance, more tax and fee cuts, more spending on vulnerable groups and infrastructure, easier tone on M2 (money supply) and TSF (total social financing) with no specific targets, more RRR (reserve requirement ratio) cuts and policy rate cuts, acceleration of hukou and land reform and more opening-up, IP protection and innovation.”


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