China Beige Book "China's Economy Also Contracts in Q2"

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Ahead of China's Q2 economic growth rate announcement on the 16th of next month, the U.S. economic consulting firm China Beige Book (CBB) International predicted that the second quarter will also fail to escape a contraction phase.

According to Bloomberg on the 23rd, CBB International, in a report analyzing Q2 economic trends in China based on a survey of more than 3,300 companies nationwide, stated that China's Q2 economy will continue to experience negative growth due to the impact of COVID-19. Key economic indicators such as manufacturing sector profits, capital expenditures, and retail sales remain at historically low levels, showing little improvement compared to Q1.

CBB International explained, "The main reason dragging down the Chinese economy is the global demand slowdown," adding, "Within China, regions heavily exposed to the global economy are experiencing sluggish economic growth, while regions with a high dependence on domestic demand are showing signs of recovery."

They further stated, "Unless global demand recovers more robustly, the Chinese economy is expected to show an overall contraction despite quarterly improvements," and added, "This is a pessimistic view, contrary to the Chinese government and many Chinese economists who anticipate economic recovery in Q2 and overall growth for this year."

Recent economic indicators released by the Chinese government show that China has not yet fully recovered from the COVID-19 shock.

China's retail sales in May decreased by 2.8% year-on-year. Although this is an improvement from the 7.5% decline in April, it still reflects a negative trend, revealing that consumption has not recovered despite various government policies to stimulate consumption. May industrial production increased by only 4.4% year-on-year, falling short of experts' expected growth rate of 5%. Fixed asset investment, which indicates spending on real estate and infrastructure from January to May, decreased by 6.3% year-on-year, a larger decline than the experts' forecast of -6.0%.

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