FRANKFURT – The Chinese economy made a relatively swift recovery after bottoming out in the first quarter of the year due to the COVID-19 pandemic, according to an article published by the European Central Bank (ECB) on Monday.

China’s economic activity rose from a trough of around 20 percent of normal levels in February 2020 to 90 percent in the span of just three months, ECB analysts said in the article, citing both traditional data and non-conventional high-frequency economic indicators.

The article found that the manufacturing sector rebounded earlier than the services sector. While the manufacturing and construction sectors returned to almost full capacity in the course of May, services sectors such as tourism, business travel, and cultural and sporting events that are associated with close physical interaction, remained below pre-outbreak capacity.

The article also said that some domestic demand components are showing signs of strengthening. It highlighted automobile sales growth, which may reflect a shift away from public transport for private customers, as well as a rise in sales of commercial vehicles such as trucks and construction vehicles amid increasing infrastructure spending.

In the near term, China’s economic prospects will depend on the resilience of domestic demand in the presence of increased uncertainty and on developments in the external environment, including the recovery of major trading partners, the analysts said.

Uncertainties remain as to the curve of COVID-19 infections in the fall and winter and the availability of the medical solution, the article noted. Additionally, pandemics could have long-lasting effects on the economy through increased precautionary saving and fewer investment opportunities, it said.

“In view of China’s increasing role in determining global growth, the uncertain factors surrounding China’s recovery are of utmost importance for the world’s economic outlook,” the article concluded.

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

How to Compete With China by Relying on America’s Strengths

With the coronavirus, China effectively annexing Hong Kong through the new national security law, a blistering speech from the U.S. Secretary of State and the closing of consulates in Houston and Chengdu, tensions between the world’s two largest economies are…

California to get $247M refund as masks face delivery delay

SACRAMENTO, Calif. — California will be refunded $247 million it paid to a Chinese company under a major deal for protective masks after the company failed to meet a deadline for federal certification of the masks, Gov. Gavin Newsom’s administration…

US consumer spending up 5.6%, but virus could stall gains

WASHINGTON — American consumers increased their spending in June by a solid 5.6%, helping regain some of record plunge that occurred after the coronavirus struck hard in March and paralyzed the economy. But the virus’ resurgence in much of the…

CNBC: China seeing strong economic rebound

China is seeing a strong economic rebound following a slump spurred by coronavirus lockdown, but don’t count on that being the case for other major economies around the world, IMA Asia’s Richard Martin was quoted as saying in a CNBC…