China continues to struggle against major economic challenges inflicted by the COVID-19 pandemic, with retail sales plummeting by 7.5% in April and with other recovery indicators still remaining tepid. China continues to slowly reopen its hard-hit economy as the COVID-19 pandemic is now under control.
On the other hand, the biggest downside is China's economy shrinking 6.8% in the first quarter year-on-year due to the immense economic damage wrought by COVID-19, the first economic contraction since 1992. The sharp reduction in growth confirms the weakness in consumer spending and investor confidence due to the demand destruction caused by the disease that kept both consumers and employees at home.
From this negative growth sprang all of the distressing economic indicators that have followed since. The National Bureau of Statistics (NBS) reported on Thursday that fixed-asset investment fell 10.3% from January to April compared to a forecast 10.0% fall. The actual drop from January to March was 16.1%.
Private-sector fixed-asset investment, which accounts for 60% of total investment, plunged 13.3% from January to April. The comparable figure from January to March was an 18.8% decline.
The 7.5% plunge in retail sales compared to the 7.0% forecast confirms that consumer consumption remains weak. Sales tumbled as shops, restaurants, malls and entertainment centers remained closed throughout China.
Producer prices saw their sharpest fall in four years earlier this week thereby highlighting a still weak industrial demand. This result was predictable given many Chinese factories are grappling with much reduced or canceled overseas orders as global demand stays weak due to COVID-19 still ravaging the economies of buyer countries such as Europe and the United States.
NBS said China's economy, which has been reopening gradually since April is still recovering and faces many challenges. The economy, however, is indicating a bright spot of growth.
China's exports saw an unexpected rebound in April, driven in part by a massive surge in demand for medical supplies. Exports rose 3.5% in April year-on-year, according to data from the General Administration of Customs. On the other hand, imports plummeted 14.2% year-on-year. China's trade surplus for April amounted to$45.34 billion compared to the $6.35 billion predicted by Reuters' economists.
China's industrial output rose 3.9% in April from a year earlier. It was the first such expansion this year indicating a firm recovery from the deleterious economic damage inflicted by the national lockdown. The improvement was faster than the 1.5% increase forecast in a Reuters poll on analysts. Industrial output fell by 1.1% in March.
