China announced Thursday that GDP had risen by 3.2% in the current quarter last year, saying that a V-shaped recovery could be underway in the world’s largest economy.
“China’s V-shaped economic recovery continued for the fourth month in a row in June, driven by domestic demand,” said Andy Rothman, a veteran investment analyst and China expert at US investment firm Matthews Asia.
“While customer spending is likely to remain weaker than the previous year, relatively speaking, China will remain the world’s most productive customer history,” Rothman said in an email.
China’s recovery comes at a time when the economy can use an elevator. Among organizations forecasting slower expansion this year, APEC’s Policy Support Unit said this month that economic expansion in the APEC region is now expected to decline by 3.7% by 2020, below its initial forecast for a 2.7% relief announced in April.
Last year, China accounted for 40% of global economic expansion, more than combined contributions to global expansion across the US, EU and Japan, according to IMF data, Matthews said. Last year was also the eighth year in a row that China’s consumer share was the highest, Rothman said.
Among the encouraging symptoms of customer spending: car sales now grew at the fastest rate year after year since January 2018, with sales increased by 11.6% in June, following an annual accumulation of 14.5% in May, in contrast to a 79.1% decrease in February, Rothman said. Sales of residential assets also continued its strong recovery last month, he said.
“The resumption of car and home sales reflects the fact that thriving and middle-class consumers have enough cash and sufficient long-term confidence to spend it,” Rothman said.
The continuation of the V-shaped economic recovery is basically based on the Chinese government’s ability to keep the coronavirus under control, Rothman said.
This is also encouraging. In the first 14 days of July, China registered only 77 new coVID-19 instances, of which only seven were the result of local transmission, he said. In contrast, in the first 14 days of July, there were 816,221 new instances in the United States and 8,120 in the United Kingdom, according to the note.
Another threat to China’s expansion, intensifying geopolitical tensions with the United States, is likely to spread to this point that reverses the country’s economic uptick. “The downward spiral in U.S.-China relations is likely to worsen, but it is very likely that China’s economic recovery will derail,” he predicts.
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@rflannerychina
I’m editor-in-chief and head of Forbes magazine’s Shanghai office. Now in my year at Forbes, I’m compiling forbes China’s Rich List and Taiwan’s Rich List. I was…
I’m editor-in-chief and head of Forbes magazine’s Shanghai office. Now in my sixteenth year at Forbes, I’m compiling Forbes China’s Rich List and Taiwan’s Rich List. In the past I was a correspondent for Bloomberg News in Taipei and Shanghai and the Asian Wall Street Journal in Taipei. I am originally from Massachusetts, I speak Mandarin fluently and graduated from the University of Vermont and the University of Wisconsin at Madison.