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Spotlight: U.S. economists encouraged by China’s economic rebound from COVID-19

Abstract : Several U.S. economists have been encouraged by the rebound of the Chinese economy, as recent data indicated that the Asian country is the first major economy to get out of the COVID-19-induced recession.

WASHINGTON, July 19 (Xinhua) — Several U.S.
economists have been encouraged by the rebound of the Chinese economy,
as recent data indicated that the Asian country is the first major
economy to get out of the COVID-19-induced recession.

“This is very encouraging news. The control of the epidemic made
possible the recovery in the second quarter,” Jeffrey Sachs, a renowned
economics professor at Columbia University, told Xinhua via email. “In
our world today, good public health is the key to good economic
outcomes.”

China’s gross domestic product (GDP) expanded by 3.2 percent year on
year in the second quarter, following a 6.8 percent contraction in the
first quarter, according to newly released data from the National Bureau
of Statistics (NBS).

Nicholas Lardy, a senior fellow at Washington D.C.-based think tank
the Peterson Institute for International Economics (PIIE), told Xinhua
in a recent phone interview that China’s industrial sector has been
recovering “most rapidly,” while the service sector has also seen
expansion, with the country “doing stunningly well” on the trade side.

Retail sales, which are only slightly down in June compared with the
same month last year, have done “extremely well” compared with other
economies and “improved dramatically,” the veteran China watcher noted.

“I think we’ll see further recovery in retail sales, which will contribute to the growth of the service sector,” Lardy said.

Andy Rothman, an investment strategist at San Francisco-based
investment firm Matthews Asia, wrote in a recent analysis that China’s
V-shaped economic recovery continued for a fourth consecutive month in
June, led by strong domestic demand.

The recovery of sales of autos and homes in China last month reflects
that “middle-class and wealthy consumers have both sufficient money and
enough confidence in the future to spend it,” Rothman said.

Noting that restaurant and bar sales in China were still down last
month, Rothman said these businesses that require customers to gather in
confined spaces are likely to take a long time to fully recover.

Lardy told Xinhua that he thinks China’s economic recovery will
continue in the second half of the year, since the country has the
COVID-19 under control.

He highlighted that China has managed to “put the brakes” on small
outbreaks in Wuhan and more recently in Beijing with massive testing,
quarantining and contact tracing measures.

“I think they have the resources and the commitment to avoid a
negative effect of the coronavirus in the second half,” Lardy said. “My
view is that the virus is not likely to be a significant factor going
forward.”

The economist said he thinks China is going to grow by 2 to 3 percent
this year, a more optimistic projection than that of the International
Monetary Fund (IMF) and the World Bank, which both forecast a growth
rate of roughly 1.0 percent for China.

Yukon Huang, a senior fellow with the Asia Program at the Carnegie
Endowment for International Peace, however, took a more cautious tone.

“Recent data is encouraging and suggest that China is the first major
economy to get out of the virus-induced recession but it is too soon to
tell if the rebound has leveled off already or will accelerate,” Huang
told Xinhua via email.

“The caution comes from modest growth in consumption since households
are cautious and concerns about export prospects given possible virus
setbacks in the U.S. and Europe,” said Huang, who served as the World
Bank’s country director for China from 1997 to 2004.

Lardy, meanwhile, highlighted China’s resilience on the export side.
“Several months ago, a lot of people were saying that the external
sector was going to be a big drag on China’s growth,” he said. “But that
clearly has not happened yet.”

Global trade is down 16 percent year-to-date, while China’s exports
in June rose 0.5 percent from a year earlier, Lardy said, noting that
“it’s an extremely strong performance” compared with the rest of the
world.

“This year, when global growth shrinks and China’s expands, on a
conventional calculation, China’s contribution to global growth is
infinite because it’s positive and global growth is negative,” Lardy
said. “So I think it’s going to play a very positive role.”

Sachs, also a senior United Nations advisor, said China’s economic recovery will help to lead a global recovery.

China should join together with Japan, South Korea, and other
countries that have suppressed the virus to support other countries,
especially in Africa and Asia, to do the same, Sachs said. “That will
speed the return to global sustainable development.” Enditem

About Xinhua Silk Road

Xinhua Silk Road (en.imsilkroad.com) is the Belt and Road Initiative (BRI) portal. China’s silk road economic belt and the 21st century maritime silk road website, include BRI Policy, BRI Trade, BRI Investment, Belt and Road weekly, Know Belt and Road, and the integrated information services for the Belt and Road Initiative (BRI).

Source: Spotlight: U.S. economists encouraged by China’s economic rebound from COVID-19

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