BEIJING: China’s economic engine is stirring to life again after a decisive and strong state response reined in coronavirus flare-ups in the country.
This was suggested by China’s latest commodity index data, which showed improvements in both factory production and market demand. This indicated that timely and targeted state policy support allowed the economy to slowly recover from Covid-19’s impact.
The China Bulk Merchandise Index, a gauge of domestic bulk commodity market growth, rose 1.6 percentage points month on month in May to 101.3 percent, the China Federation of Logistics and Purchasing (CFLP) said. Meanwhile, both the supply and sales sub-indexes bottomed out and showed encouraging rebounds.
With Covid-19’s impact fading and pro-growth measures in force, market demand is recovering and business operations are showing positive signs, the CFLP said. Sales of all major merchandise rose, including steel, coal, nonferrous metals, chemicals and automobiles.
The expanding commodity market offered evidence of an economy emerging from Covid-19’s shadow, with disrupted factory activities and human lives returning to normal.
The logistics sector — one of the sectors hardest hit by the latest coronavirus wave — showed signs it was recovering last month, making firms upbeat about their growth prospects. The same is said for the manufacturing sector, as its purchasing managers’ index inched up to 49.6 in May from 47.4 in April.
Meanwhile, while the country is having its weeks-long online shopping bonanza that began on June 1, many retailers reported rising sales volumes.
Robin Xing, chief China economist at Morgan Stanley, said that although the worst phase of the outbreak might have ended, the recovery trajectory would most likely be U-shaped.
To enhance this recovery, China has unveiled a package of measures to further stabilize the economy and better coordinate outbreak containment.
The policies, announced during a recent State Council executive meeting, include 33 detailed measures designed to ramp up fiscal and financial support, bolster investment and consumption, guarantee food and energy security, smoothen industrial and supply chains, and ensure people’s livelihoods.
Premier Li Keqiang has underlined the need to earnestly implement those policies and urged swift action to get the economy back on track.
Clear signals have been sent that the country has taken concrete steps to stabilize growth, especially at the primary levels, analysts said.
The China International Capital Corp., a joint-venture investment bank, believes that some of these pro-growth policies are stronger than those in 2020 and given effective Covid-19 control, should help buoy recovery in the second half of 2022.