China’s factory output rose for the first time this year, as the world’s second-largest economy slowly emerged from lockdown, although consumption remained depressed amid increased job losses.
Industrial production climbed 3.9 percent last month from a year earlier, data showed yesterday, faster than the 1.5 percent increase forecast in a Reuters poll of analysts and following a 1.1 percent fall in March.
After months of lockdowns due to COVID-19, China is reopening its economy as the outbreak on the mainland comes under control. The production of oil, coal, metals and electricity all increased as plants restarted operations last month.
Photo: AFP
However, China continues to face major challenges in its services sector, particularly retail, and as the pandemic sweeps the rest of the globe, affecting other major economies and trading partners.
Of particular concern for policymakers ahead of next week’s annual meeting of parliament is the prospect of a spike in unemployment, which poses significant political risks for the nation of 1.4 billion.
“Overall, this set of data shows only small and gradual improvements in economic activity, which could upset markets as China is seen as the ‘first out’ economy from COVID-19,” said Iris Pang (彭藹嬈), chief economist for Greater China at ING.
The economy shrank for the first time since at least 1992 in the first quarter, as restrictions to curb the spread of the virus shut down factories and shopping malls.
Although much of the economy has reopened, many manufacturers are struggling with reduced or canceled overseas orders as global demand falters. Earlier this week, data showed producer prices falling at their sharpest pace in four years, as industrial demand weakened.
While exports unexpectedly rose last month, driven in part by demand for medical supplies, imports saw a sharper-than-expected dive, signaling weak domestic demand.
More telling was a collapse in export orders seen in various factory surveys for last month, which has significant implications for the industrial sector.
National Statistics Bureau spokesman Liu Aihua said unemployment pressure remained “relatively big.”
China’s surveyed unemployment rate for last month was 6 percent, slightly higher than the previous month.
Of greater focus are China’s migrant workers, who are a significant part of the workforce and often not counted in official data.
Liu said the number of migrant workers who had returned to their cities of employment from their hometowns last month was at 90 percent of levels seen in previous years.
However, Capital Economics senior China economist Julian Evans-Pritchard said that figure is probably closer to 80 percent, suggesting true unemployment is double the official rate.
Those unemployment pressures are likely to strain household finances and drag on consumption.
Consumer spending remained weak last month, with retail sales falling 7.5 percent, faster than the forecast 7 percent decline and extending the tumble in the first three months of the year as shops and restaurants across the nation closed.
Fixed-asset investment slid 10.3 percent in January-April, compared with a forecast 10 percent fall and a 16.1 percent decline in January-March.
Private sector fixed-asset investment, which accounts for 60 percent of total investment, fell 13.3 percent in January-April, compared with an 18.8 percent decline in the first three months of the year.
However, China’s property sector showed some resilience, with real estate investment quickening last month, while property sales fell at a much slower pace, providing some relief for authorities.
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