China reported that the country’s GDP grew 3.2% in the second quarter of this year, compared to a year ago – beating analysts’ expectations and rebounding from the contraction in the first quarter.
It occurs when the blockades to contain the coronavirus epidemic in China have eased and when Beijing has launched stimulus measures to support its economy.
Economists interviewed by Reuters expected gross domestic product to grow modestly to 2.5% in the April-June quarter.
China’s official GDP data are plotted as an indicator of the health of the second world economy, but many external experts have long expressed skepticism about the veracity of Chinese reports.
“In general, the national economy gradually overcame the negative impact of the epidemic in the first half and demonstrated an impulse for restorative growth and gradual recovery, further manifesting its capacity for development and vitality,” said the National Office Chinese statistics in a press release on Thursday.
The Chinese government has introduced measures to revive the economy, including tax spending and cuts in banks’ loan rates and reserve requirements – the amount of money lenders need to keep in reserve.
Signs of recovery
Recent data outside of China show some signs of recovery. Trade numbers in June showed that Chinese dollar exports and imports increased. Manufacturing activity also expanded in June compared to May, showing two different sets of surveys.
Chinese exports gained “huge market shares” while the rest of the world was stuck, said Bo Zhuang, TS Lombard’s chief economist in China before the data was released. China started easing blockade measures relatively earlier than other countries.
Zhuang said he expected China’s GDP recovery to be sustainable in the next two quarters, as the domestic economy appears to be “doing well” with infrastructure growth and reopening of travel between provinces, he told “Traffic Signs” of the CNBC.
Zhuang said that a recovery of around 5% in the next two quarters is “definitely foreseeable”. Full-year GDP growth in China was 6.1% in 2019.
The challenges remain
However, there are still headwinds as the outbreak that first surfaced at the end of last year in the Chinese city of Wuhan spread globally, affecting over 13.5 million people worldwide and killing more than 582,000 people, according to the latest data collected by Johns Hopkins University.
The Chinese statistical office recognized the risks.
“Given the continuing spread of the epidemic globally, the large evolving impact of the epidemic on the global economy and the significant increase in risks and external challenges, the national economic recovery was still under pressure”, reads the press release .
The world economy is expected to enter a recession this year as many global governments have implemented blockades and limited commercial activities and social gatherings. The slowdown in global demand growth is expected to damage Chinese exports.
This year, China made the rare decision not to set a GDP target due to the uncertainties surrounding the impact of the pandemic.