China's economic recovery continues in May with COVID-19 largely under control: expert-Xinhua

China's economic recovery continues in May with COVID-19 largely under control: expert

Source: Xinhua

Editor: huaxia

2020-06-19 13:37:49

WASHINGTON, June 18 (Xinhua) -- China's economic recovery continued in May with consumer spending, manufacturing and investment all "bouncing back strongly" and the COVID-19 pandemic largely under control, according to a U.S. investment expert.

"When thinking about prospects for the Chinese economy, one of the most important factors is whether the coronavirus remains under control," Andy Rothman, investment strategist at San Francisco-based investment firm Matthews Asia, wrote in an analysis earlier this week.

At the moment, "a combination of testing, contact tracing and social distancing, as well as strict quarantine of all international arrivals seems to be keeping the virus largely at bay," he said.

Noting that businesses in China have gradually been opening and life is starting to return to normal, Rothman said the recovery of sales of autos and homes in May reflected that "middle-class and wealthy consumers have both sufficient money and enough confidence in the future to spend it."

"And it wasn't only big-ticket items that bounced back last month. Sales at food services and drinking places rose 31 percent month-on-month in May after a 26 percent MoM increase in April," he said.

While unemployment remains a concern, the absence of social unrest and the rebound in consumer spending suggests that the Chinese government's support for workers and businesses "has provided a cushion for many who lost their jobs," laying the foundation for an economic recovery, said the expert.

Rothman also noted that this healthy economic recovery has come without a dramatic stimulus, as credit growth has only accelerated modestly.

"This highlights the strength of an organic recovery, and leaves the government with plenty of dry powder if the recovery were to falter," he said.

As China has become a domestic-demand driven economy, Rothman believed that a possible COVID-driven global recession is unlikely to derail China's ongoing economic recovery.

"Last year, domestic consumption accounted for almost 60 percent of GDP growth. The gross value of exports was equal to 17 percent of China's GDP, but almost 30 percent of those exports were processed goods for which little value was added in China," he said. Enditem