'From Worst Ever to Positive Growth'... Twice Surprised by China's Growth Rate in the First Half (Comprehensive)

GDP Q1 -6.8% to Q2 3.2% Sharp Rebound
President Xi Jinping Shows Confidence Saying "Long-term Economic Growth Trend Will Not Change"

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese economy, which had plummeted due to the novel coronavirus infection (COVID-19), has rebounded into positive territory.

On the 16th, the National Bureau of Statistics of China announced that the gross domestic product (GDP) for the second quarter was 25.011 trillion yuan, representing a 3.2% increase compared to the same period last year. China recorded a growth rate of minus (-) 6.8% in the first quarter, the lowest since quarterly GDP growth rates began to be announced in 1992.

Key economic indicators such as export-import statistics, which suggest a rebound in the second quarter economic growth rate, began to emerge from last month. The rebound was expected, and the focus was whether it would turn positive or just significantly reduce the negative growth rate.

Industrial production, an indicator measuring output in manufacturing and mining sectors, increased by 4.4% compared to the second quarter of last year.

Also, fixed asset investment in the first half of the year was 2.81603 trillion yuan, a 3.1% decrease compared to the second quarter of last year. The decline was mitigated as government-led infrastructure projects gained momentum, increasing fixed asset investment. This is seen as an indication that the Chinese economy, which had halted due to the epidemic, has started moving again.

Earlier, the Bank of China projected a 2.8% growth rate for the second quarter in its own report. The Bank of China predicted that the growth rate would reach 5.2% in the third quarter and that China's annual growth rate for this year would be 2.5%.

The Chinese government continues to express confidence in the economic recovery.

Chinese President Xi Jinping said in a letter to global CEOs on the same day that China's long-term economic growth trend will not change, according to Xinhua News Agency.

◇ The key to growth is 'COVID-19' = COVID-19, which first broke out in Wuhan, China, plunged the entire country into fear. Wuhan, a city with a population of 10 million, was completely locked down, and cities across the country were shut down. Production and consumption activities were also halted. In February and March, when COVID-19 was rampant, the world's factory, China, stopped.

The spread of COVID-19 in China is now under control. As of the 14th, there were 6 new confirmed COVID-19 cases in China, all imported from overseas. China's cumulative confirmed cases stand at 83,611, with 4,634 deaths. With COVID-19 under the control of Chinese health authorities, various economic indicators such as industrial production, fixed asset investment, and manufacturing and service PMI are showing signs of recovery.

Premier Li Keqiang also evaluated at an economic experts and businesspersons roundtable on the 13th that "the epidemic has had an unprecedented impact on the economy," and that the economy has entered a recovery growth trend.

Since COVID-19 has not ended, it is still premature to be optimistic about the Chinese economy. If a second wave begins this fall and winter, the Chinese economy could plummet again.

Moreover, major economies such as the United States and Europe are still struggling with COVID-19, limiting China's economic growth.

Liu Aihua, spokesperson for the National Bureau of Statistics, said on the same day, "The Chinese economy is gradually overcoming the impact of COVID-19 and showing signs of recovery, and it will continue to recover in the second half of the year," but also noted, "Because COVID-19 continues to affect the global economy, domestic economic recovery still faces pressure."

◇ US-China conflict also a variable = On the 14th (local time), when President Donald Trump signed an executive order revoking Hong Kong's special status, China summoned the US ambassador to China, expressed strong dissatisfaction, and warned of corresponding retaliation. Since the US-China trade dispute began, conflicts have occurred over the Hong Kong National Security Law, Taiwan independence issues, COVID-19 responsibility, human rights in Xinjiang Uighur, and South China Sea territorial claims. It is generally agreed that bilateral relations have deteriorated.

The problem is that political relations between the two countries directly affect the economy. Under the current circumstances, it is unlikely that the second phase of trade negotiations between the two countries will proceed smoothly. In January, China made a large-scale purchase of US products including agricultural products, while the US withdrew additional tariffs on Chinese products and lowered tariff rates on some products as part of the first phase trade agreement.

The second phase trade negotiations are much more complex than the first, involving subsidies to Chinese state-owned enterprises and correction of unfair trade practices. Even if relations between the two countries improve, these are difficult issues to resolve. The second phase trade negotiations could be shelved, and the possibility of the first phase agreement being canceled cannot be ruled out.

This content was produced with the assistance of AI translation services.