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MACRO: More positive signs show in China’s Aug economy

Many economic sectors in China including those of consumption, industrial production and investment showed more positive signs of returning to their normal tracks by the end of August, according to a series of highlights published individually by the country’s National Bureau of Statistics (NBS) on September 15.

Last month, China’s retail revenue from consumer goods returned to the positive zone, posting 0.5% on-year growth, NBS highlighted. After inflation on year was excluded, the monthly value still declined 1.1% on year, though the level had narrowed from the 1.6% on-year loss in July, the data show.

A breakdown by urban and rural areas confirmed that retail revenues posted on-year gains for both in August, up 0.5% and 0.7% respectively, with the gain in rural areas growing faster than revenues in cities and townships, NBS noted.

Among the consumer goods, revenue from jewelry, cosmetics, and telecommunication products posted double-digit on-year growths in value, up 15.3%, 19% and 25.1% respectively on year.

Also encouraging was the data showing that China’s catering and hospitality industries posted on-month improvements in August though both still declined on year, NBS noted. The catering industry narrowed the on-year decline by four percentage points from July, and the hospitality sector’s revenue narrowed the on-year drops by nine percentage points from the totals in July, indicating that Chinese citizens have gradually resumed travelling and dining out.

By late August, more wholesalers and retailers in China had seen their business orders gradually return to normal, with those operating at 80% of the normal level being 3.1 percentage higher on month, and those operating at 50% of normal being up 7.6 percentage points from late July.

Before the outbreak of the pandemic, consumption had contributed to over half of China’s gross domestic product (GDP) and half of the country’s annual GDP growth, Mysteel Global understands.

Other than consumption, China’s industrial sector including heavy and light industries posted a 0.4% on-year gain in its cumulative added value in the first eight months, as against a 0.4% on-year drop over January-July. Of the 41 industrial categories NBS tracks, 16 posted positive gains over January-August, four more than the total number in January-July.

For heavy machinery, by August those products directly related to infrastructure construction such as excavators, cement mixers, and heavy-duty tractors had been maintaining growth levels in excess of 40% on-year for five consecutive months, the bureau highlighted.

As for the detailed analysis of China’s fixed asset investment, funding in infrastructure construction declined 0.3% on year over January-August, as against the 1% on-year drop in the first seven months, though that in the railway transportation grew 6.4% on year, according to NBS. This was 0.7 percentage point higher than that over January-July. 

China’s central government has expressed its confidence in relying on the country’s vast domestic market to revive the economy in 2020, despite the heavy blow of the pandemic in the first quarter of 2020. So far, progress has been rather satisfactory, Mysteel Global noted.

Written by Hongmei Li, li.hongmei@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com