July 2020
Executive summary
The 2020 half-year results are in. China outpaces other countries in terms of economic rebound. It has posted a V-shaped recovery in the second quarter in sharp contrast to steep contractions globally. Looking forward in the next six months, China is expected to continue its recovery despite headwinds from escalating US-China tensions and weakened global demand for Chinese exports due to COVID-19.
GDP continues to climb
China is one of the few countries in the world to post a positive GDP growth rate at 3.2% in Q2 (yoy). That is an 11.5% increase from Q1 quarter and is the most dramatic recovery compared to other major markets.
V-shaped recovery
Other indices support China’s economic V-shape recovery. Utilization of industrial capacity (ratio of actual output to production capacity) is up 7.1% from Q1. Purchasing Manager Index or PMI (indicator of health for the manufacturing sector) already recovered in March. China’s retail sales of consumer goods is recovering continuously since February, although demand is still below pre-COVID levels. Acceleration of Digitization in China
Positive growth prospects in Q3 and Q4 despite risks.
There are several key risks ahead including mounting tensions between US and China over trade and Hong Kong, as well as subdued global demand for Chinese exports due to the pandemic. However, economists agree that China has emerged from COVID-19 as the global growth story of 2020. China is expected to continue its recovery in the next six months. To learn about investing in China, watch this short video.
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