By Gina Lee
Investing.com – China reported a slew of economic data on Thursday that showed the world’s second largest economy avoiding a recession in the second quarter. But it still faces an uphill battle on its path to economic recovery from COVID-19.
The National Bureau of Statistics said that GDP grew 3.2% year-on-year for the second quarter, beating analyst expectations of a 2.5% increase and reversing the previous quarter’s 6.8% decline. It also reported that June’s industrial production was up by 4.8% year-on-year, but retail sales were down 1.8% year-on-year.
The unemployment rate was 5.7%, down from the previous month’s 5.9%.
Thursday's data followed the release of positive customs data on Tuesday. The Chinese government also announced out stimulus measures, such as tax and fee cuts, cheaper loans, and increased fiscal to deal with the virus’ economic impact during the National People's Congress in May. Despite the better-than-expected GDP, the fall in retail sales figures indicated weak consumer sentiment, with the measures falling below those rolled out in other countries.
A major hurdle on China’s path to recovery continues to be the unemployment level attributable to the manufacturing sector’s collapse in the previous quarter. There are concerns that the decline in the unemployment rate does not capture the full picture, with the rate expected to be higher than reported.
“The message is clear here that China’s recovery is much stronger than the rest of world, largely benefiting from the effective epidemic control and the orderly normalization procedure,” said Zhu Haibin, Chief China Economist at JPMorgan Chase (NYSE:JPM), told Bloomberg.
But he warned, “In the second half, the momentum of further recovery will be softer.”