China’s Economy Should See an Uptick in May as Covid Outbreaks Subside, Official Says
Zhu Yanran
DATE:  May 16 2022
/ SOURCE:  Yicai
China’s Economy Should See an Uptick in May as Covid Outbreaks Subside, Official Says China’s Economy Should See an Uptick in May as Covid Outbreaks Subside, Official Says

(Yicai Global) May 16 -- China’s main economic indicators tumbled in April as the latest Covid-19 flare-ups brought many parts of the country to a standstill, but as the outbreaks come under control, the outlook for May is better, a spokesperson for the National Bureau of Statistics said today.

Key data for April all plunged. The total retail sales of consumer goods slumped 11.1 percent from the same period a year earlier, widening 7.6 percentage points from March’s decline, according to figures released by the NBS today. Retail sales of consumer goods in the economic hubs badly affected by the novel coronavirus plummeted over 30 percent year on year.

The outbreaks of Covid-19 last month affected the economy, but this is a short-term and external influence, NBS spokesman Fu Linghui said. China’s economic stability and long-term prospects remain changed. As the outbreaks begin to come under control, especially in the worst-hit areas of Shanghai and northeastern Jilin province, the economy should gradually recover.

Consumption was suppressed due to the outbreaks, Fu said. Retail sales dived 9.7 percent and revenue in the catering revenue plummeted 22.7 percent. Now that work and life is returning to normal, people’s spending power should pick up.

Consumption is still weak, and this has to do with the impact of the pandemic and how it affected people’s livelihoods and their income, said Liang Zhonghua, chief macro analyst at Haitong Securities.

Stabilizing the macroeconomy, stepping up assistance to businesses and ensuring employment will safeguard consumption, Fu said. In addition, as a number of supportive policies come into effect, spending is expected to bounce back.

The added value of industries above a designated size fell 2.9 percent in April from a year earlier, compared with 5 percent growth in March, the NBS said. In the economic hub of the Yangtze River Delta Region, which comprises Shanghai and neighboring areas, the added value of industries sank 14.1 percent and in the northeast it slid 16.9 percent.

Manufacturing came under a lot of pressure amid the extended lockdowns, Fu said. But a number of businesses started to reopen from the middle of April. In the next step, transport routes will be opened up further to facilitate logistics and business tax and fee cuts will start to come into effect, all of which will boost confidence, improve operations and promote the long-term recovery of the manufacturing sector, he said.

Fixed-asset investment in the four months ended April 30 was CNY15.35 trillion (USD2.3 trillion), a year-on-year gain of 6.8 percent, and just 2.5 percentage points less than growth in the first quarter, the NBS said.

Private enterprises are now back at work, more confidence will lead to an increase in investment in manufacturing and real estate investment is also likely to bottom out at the end of the second quarter, thus driving fixed-asset investment upward, said Lian Ping, president of Zhixin Investment Research Institute.

Editor: Kim Taylor

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Keywords:   Consumption,Investment,Industrial Production