CGTN | 07-Jul-2020
China’s uncompromising method to tackling the coronavirus pandemic is paying dividends, as a raft of survey information showed last week that financial exercise is gathering momentum in the country, according to The Wall Street Journal.
The Caixin Services PMI, a non-official gauge of China’s service-sector exercise released last Friday, surged in June to 58.4, its highest degree in a decade, as the easing of virus-control measures drove customers’ demand. The index got far above the 50 mark that separates enlargement from contraction, signaling fast month-over-month recovery. In February, the Caixin Services PMI plunged to a historic low of 26.5, a dramatic pullback in the country’s service sector. The index remained deep in contractionary territory for two extra months and crawled again into enlargement in May.
The robust rebound in the Caixin Services PMI was consistent with other data reported earlier last week. The official non-manufacturing PMI launched last Tuesday jumped to a seven-month high in June, whereas the official manufacturing PMI reached a three-month high. China’s June factory activity records faster expansion, shows steady recover. The readings have restored sufficient confidence and elevated hopes for a full recovery later this year. China’s strategy of stamping out the coronavirus outbreak first and then making an attempt to reopen the economy appears to be best determination, mentioned Ding Shuang, a Hong Kong-based economist with Standard Chartered.
Given the uncertainties in the vaccine research and development, “the benefit of this method I ought to say is pretty apparent,” Ding said. Many U.S. states have been pressured to reverse course and shut down restaurants and bars and require wearing face masks in public areas, as new infections per day surpassed 50,000 last Wednesday for the first time. The new wave of coronavirus infections and restrictions on business activities threatens to throw a nascent recovery off track, after the U.S. on Thursday reported a second straight monthly drop in the jobless rate in June.
Meanwhile, authorities in China have aggressively attacked even small outbreaks in regions across the country. The latest cluster that broke out in Beijing’s Xinfadi wholesale market prompted a swift and vigorous response from the local authorities, including nucleic acid testing of millions of residents and new restrictions on people’s moving in and out of the capital. The country reported simply two new infections Thursday, both cases in Beijing. Despite that periodic outbreaks throughout China that have prompted local authorities to impose new restrictions, the country has seen its economic recovery largely unimpeded, which propped up economists’ expectations for a full-fledged return to normal in the second half of this year.
Lian Ping, a chief economist at Zhixin Investment Research Institute, forecasted China’s economic growth over 6 percent year on year in the second half of 2020, roughly consistent with the 6.1-percent GDP growth in China in 2019. Due to the spreading coronavirus pandemic, China’s economy posted its first contraction in decades, contracting 6.8 percent year on year at 20.65 trillion yuan (about 2.91 trillion U.S. dollars) in the first quarter of 2020. The International Monetary Fund predicted in its latest economic outlook report that China could be the only major economy in the world to gain economic growth with growth rate at one percent.
Regardless of the generally bright outlook, sentiment around employment stays weak. Economists are concerned that persistent employment strain in China, together with economic uncertainties in the U.S., the largest export market for Chinese goods, may still hinder the long-term recovery of the Chinese economy.
Earlier last week, China’s central bank mentioned that it will lower lending rates for small businesses and rural debtors.
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