New energy vehicles, which include hybrid and battery cars, have seen an increase in sales in China despite the stagnation in the auto market in general. Pictured, an unnamed new energy automobile plant in Jiangsu Province on June 13, 2022.
Wan Shanchao | China Optical Group | Getty Images
BEIJING – China released economic data for May that beat muted expectations for a month hampered by Covid controls.
Industrial production rose modestly 0.7% in May from a year ago, versus an expected 0.7% decline, according to analysts polled by Reuters. In April, industrial production fell unexpectedly, down 2.9% year over year.
Retail sales fell less than expected, down 6.7% in May from a year ago. It is estimated that retail sales fell 7.1% in May from a year ago, according to a Reuters poll. In April, retail sales fell 11.1% from a year ago.
Fixed-asset investment in the January-May period rose 6.2%, beating expectations for 6% growth.
China’s National Bureau of Statistics said in a statement that the economy “showed good momentum for recovery” in May “with the negative effects of the COVID-19 epidemic gradually overcoming and key indicators improving marginally.”
“However, we must realize that the international environment will be more complex and bleak, and the domestic economy still faces difficulties and challenges to recover,” the office said.
China’s exports accelerated in May to post a better-than-expected increase of 16.9% year-on-year in US dollars. Imports also rose 4.1% more than expected.
Shanghai and Beijing, China’s two largest cities by GDP, were forced to re-tighten Covid controls this month after a steady rise in Covid cases.
Shanghai had closed its doors in April and May, with only some major companies operating. The city began to fully reopen its doors on June 1.
For about a month in May, Beijing required people in its largest commercial district to work from home, while restaurants across the capital could only operate on a takeaway or delivery basis. Most restaurants in Beijing were allowed to resume in-store dining in early June, and employees can return to work, but schools have delayed the resumption of in-person lessons.
Uncertainty, especially about future income, has affected consumer spending. The unemployment rate in China’s 31 largest cities surpassed its 2020 high of 6.7% in April – the highest rate ever going back to 2018. That rate rose further in May to 6.9%, while the overall unemployment rate in cities fell to 5.9% .
The unemployment rate for young people aged 16-24 rose to 18.4% in May, compared to 18.2% in April.
“I think that as restrictions are eased and we have support for monetary policy going forward, the unemployment rate should come down a little bit bearing in mind that we are well above the government’s target,” Françoise Huang, chief economist at Allianz Trade, said by phone. interview last week.
“For now, my scenario is that we should see some recovery in the second half of the year,” she said. “it’s not [a] V-shaped recovery, quick and strong recovery, or post-Covid recovery as we saw in 2020, because the easing policy is not strong and external demand is not that strong.”