China’s Economy Slowly Recovers Despite COVID-weakened Demand, Market Disappointment

China’s Economy Slowly Recovers Despite COVID-weakened Demand, Market Disappointment

Data from the last two months revealed that China’s economy slowly moves to recovery after COVID-19 pandemic dragged down all sectors.

Positive sentiments from the business sector and the improving global outlook contributed to the Asian economic giant. Positive signs on the economy surfaced amidst weak worldwide demand and decline in last week’s financial market due to concerns about China’s stimulus plans.

The industrial economy recovers despite wary consumers.

Standard Chartered Plc survey revealed that smaller firms were more confident in May than before the pandemic because of their growth in production and demand. Despite the decline in consumption and imports, industrial output improved in April. The contribution of smaller firms will play an essential role in China’s growth as it relies heavily on exports.

Standard Chartered economists Shen Lan and Ding Shuang wrote on a report that production continued to lead the recovery, and domestic demand gained momentum.

They added that the strength of local demand improvement would determine if production acceleration can be sustained as capacity utilization continues to rise. They also wrote that overseas demand weighs on any desire to expand since it is sluggish.

Expert: China’s trade remains soft, but improvements might emerge

South Korea’s trade figures showed a decline of 20% in the first 20 days of May, with the decrease of shipments from China of 1.7% from last year during the same period.

David Qu, an economist at Bloomberg, said that Chinese exports rose in April because manufacturers were able to catch up on orders before the pandemic.

The economist wrote this month that China’s trade is likely to remain soft, though some marginal improvement may emerge in the months ahead. He also noted that a quick rebound to pre-pandemic levels is unlikely.

Disappointment in the market

Over the last month, the stock and commodity market declined because of the government’s economic targets and imposed measures. The market is also reactionary to the continuing conflict with the United States.

Scheduled infrastructure build-up might increase the demand for metal like copper and steel. Still, it is not enough to offset the lack of demand is vital sectors like manufacturing, property, and exports.

China-US tension adds to COVID-19 market threat

The COVID-19 pandemic dragged economies around the world as demand and production declined due to stay-at-home measures. Despite the global concern for safety, the trade conflict between China and the US continued. The tension between the two nations causes an additional burden to businesses that are already struggling to survive the pandemic.

The two nations continued exchanging blames and unverified reports about the virus’s origin for the past few months. US President Trump publicly blames China for the spread of the virus.

The US government recently passed a law that bans Chinese companies in US listings. In response, China threatened Hong Kong’s city status that might break the trade link between China and the rest of the world.

Global investors are concerned since the conflict between the two economic giants also affects non-partisan businesses. Businesses reliant on trade with the two nations fear that they might not survive the financial crisis brought by the COVID-19 pandemic and the conflict between the two leading economies.

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