(Yicai Global) July 14 -- China’s gross domestic product in the second quarter will reverse the sharp decline of 6.8 percent in the first quarter and achieve modest growth as five major economic indicators show steady improvement, according to a survey of chief economists at major financial institutions conducted by Yicai Global.

China’s GDP should have expanded by 0.6 percent between April and June, said Wang Tao, chief China economist and head of Asia economic research at Swiss bank UBS.

Industrial electricity consumption, crude steel production, excavator sales, railway cargo volume and courier service volume all picked up in recent months, an industry insider said.

China's power generation, as calculated from the coal consumption of the country’s five major power generation groups, jumped by about 9.1 percent in early June, more than double the growth rate in May, and also higher than the same period last year.

While the full June data has not yet been released, power generation this month is expected to surge, said Li Chao, chief economist at Zheshang Securities. As an important index of industrial production, this will boost value-added industrial output, which measures the activity of designated large enterprises with annual turnover of at least CNY20 million (USD2.8 million), he added.

As manufacturing accelerates, value-added industrial output could rebound to 4.5 percent last month, better than May’s 4.4 percent, said Wang Jun, chief economist at Zhongyuan Bank and a member of the academic committee of the China Center for International Economic Exchanges.

Infrastructure Projects Increase

China's crude steel production hit its highest level in nearly a decade in mid-June, driven by strong demand for infrastructure projects, according to the China Iron and Steel Association. Key steel companies produced a total of 21.4 million tons of crude steel late last month, an increase of 5.7 percent from a year earlier.

China approved record levels of local special bond issuance in the wake of the epidemic to promote investment in infrastructure. As a result, the production and sales of excavators have increased rapidly, said Chen Xing, head of a research team at Haitong Securities.

Sales of excavators, a major economic barometer, soared by nearly 63 percent last month to 24,600 machines, according to the China Construction Machinery Association. First half sales were up 24.2 percent to 170,400 units and are expected to reach 300,000 by the end of the year.

Meanwhile, fixed asset investment fell 6.3 percent in the first five months compared with the same period last year. This is expected to narrow to 3.1 percent in the first half.

Rail Freight, Couriered Goods Boom

Railway cargo reached its highest level since the beginning of the year in June with an average daily volume of 10.16 million tons, according to the National Railway Administration of China. Shipments grew 7.9 percent to 30.5 million tons last month from the same period last year. In all, China’s railways delivered 1.69 billion tons of goods in the first half, up 3.6 percent annually.

Express couriers have also recovered quickly, with 22.5 percent growth in the first half, similar to last year, according to the State Post Bureau. Delivery volumes bounced back rapidly in the second quarter, with growth rates of 40 percent in both May and June from the same period last year.

Express delivery services were able to get back on their feet so soon after the Covid-19 pandemic largely because of the huge shift online in the consumer market which has seen a significant rise in online consumer demand in small towns and rural areas, said Hu Kai, deputy director of the Research and Development Center at the State Post Bureau.

The total retail sales of consumer goods last month is likely to rise 3 percent from a year earlier, reversing the previous falling trend, said Chen Xing and his team from Haitong Securities. Nationwide sales of consumer goods shrank 2.8 percent in May.

Major macro-economic figures for first-half GDP, value-added industrial output, fixed asset investment and retails sales of consumer goods are due to be released on July 16.

Editors: Tang Shihua, Kim Taylor