The Bank of Korea: "China's Economy Shows Steady Recovery... Domestic Demand Recovery Accelerates as Movement Restrictions Ease"

Bank of Korea 'Overseas Economic Focus'

[Asia Economy Reporter Kim Eunbyeol] Major indicators such as production and consumption in China have continued a solid recovery, with increases of over 30% compared to the same period last year. Recently, as the spread of COVID-19 infections has slowed and movement restrictions have been eased, it is expected that domestic demand recovery will accelerate.

According to the Bank of Korea's 'Overseas Economic Focus' on the 28th, China's industrial production from January to February increased by 35.1%, a significant rise compared to 7.3% in December last year. Exports grew by 60.6%, showing a strong trend compared to 18.1% in December last year, influenced by movement restrictions during the Lunar New Year, which led to fewer visits to hometowns and rather increased factory operating days.

Retail sales improved significantly as well, rising from 4.6% to 33.8% during the same period, and fixed investment increased from 2.9% to 35.0%, showing considerable improvement in key domestic demand indicators. Although a substantial part of the early-year increase is due to the base effect since major indicators had sharply declined last year due to the COVID-19 impact, the indicators themselves are greatly improving.

The manufacturing Purchasing Managers' Index (PMI), which reflects business sentiment, fell from 51.3 in January to 50.6 in February due to concerns over the resurgence of COVID-19, and the services PMI also decreased slightly from 51.1 to 50.8, showing some contraction, but both remain above the baseline of 50.

Meanwhile, the Chinese government eased domestic movement restrictions after the average daily new COVID-19 cases (excluding imported cases) dropped to zero from the 1st to the 15th of this month. The requirement to carry a negative COVID-19 test certificate conducted within 7 days when traveling between regions in China was lifted on the 16th.

The Bank of Korea stated, "It is expected that domestic demand recovery will accelerate as China's service and tourism sectors improve."

On the other hand, the Bank of Korea assessed that the Japanese economy is showing a weak economic trend centered on consumption, with retail sales and household consumption declines widening due to quarantine measures. Although consumption sentiment is expected to gradually recover and the economy is projected to improve with the implementation of large-scale economic stimulus measures, the slow pace of vaccine rollout may act as a factor limiting the economic recovery trend.

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