After April dip, China's economy expected to rebound

Aerial photo taken on May 26, 2021 shows the Yangpu international container port at Yangpu economic development zone in South China's Hainan province. [Photo/Xinhua]

Although China faces downward pressure due to the complex international environment and sporadic virus outbreaks domestically, the fundamentals sustaining the country's steady and long-term economic growth remain unchanged, with major macro indicators expected to see a significant rebound in the coming months, experts said.

The value-added industrial output in April dropped 2.9 percent year-on-year. As production was suspended by the pandemic, the manufacturing sector, especially in the Yangtze River Delta and Northeast China, saw obvious declines.

April turned out to be the year's tough period, but the overall economy will start to recover from May, said research by Citic Securities, Yicai.com reported. Currently, new confirmed COVID-19 cases are dropping in key cities, and the transportation difficulties that hindered the operation of enterprises have been effectively alleviated.

Fu Linghui, a spokesman for the National Bureau of Statistics, said China still has a complete industrial system with strong support. The added value of industrial enterprises above designated size increased by 4 percent year-on-year, in the first four months.

Retail sales of consumer goods totaled about 2.95 trillion yuan ($434.28 billion) in April, down 11.1 percent from a year earlier.

The drop in consumption was mainly caused by the short-term impact of the virus outbreak, Fu said. As production and life return to normal, pent-up consumption power will be gradually released.

Wang Jun, a member of the China Chief Economist Forum, told Yicai.com that China has huge consumption potential and space to be tapped. He suggested that the government take actions via fiscal policy, for example, issuing shopping coupons to stimulate consumption in the short term.

From January to April, fixed-asset investment reached 15.35 trillion yuan, up 6.8 percent from the same period last year. Investment in infrastructure and manufacturing sectors increased 6.5 percent and 12.2 percent, respectively. Investment in real estate dropped 2.7 percent.

Zhu Haibin, JP Morgan's chief China economist, said the real estate market in China is estimated to recover in the second half, as central and local governments issued various policies to boost the property industry, and ease the financing dilemma of housing developers, according to Yicai.com.

Major indicators related to real estate are also expected to turn positive in the fourth quarter of this year, Zhu said.

Despite the slight decline in the figures of industrial and service sectors in April, the second quarter will maintain a good growth trend, Fu said.

Starting this month, related government departments released a series of policies on assisting SMEs and ensuring the employment of new graduates.

Economic recovery will speed up as the supporting policies take effect, said Zhu, and he expected that economic performance in the second half will be significantly better than in the first half.