The way forward: Geely Auto Group CEO Jerry Gan unveils the Galaxy Starship AI-driven SUV prototype in Beijing. China’s value-added industrial output grew by 5.6% in May, while fixed-asset investment increased by 4% in the January to May period. — AP
BEIJING: China’s economy is set to rebound steadily in the second quarter, given steady demand recovery, resilient exports and a low comparison base in the previous year, analysts say.
They noted the country is heading in the right direction with regards to dealing with structural issues like property woes, and said more efforts should be made to overcome housing troubles and boost effective domestic demand.
Their comments came after the National Bureau of Statistics (NBS) released data on Monday that showed that China’s economy exhibited signs of stabilisation in May, with improvements in some key indicators and new growth drivers gaining momentum.
Liu Aihua, an NBS spokeswoman, said May’s steady economic rebound was led by strong policy stimulus, an improvement in external demand and the positive impact of the May Day holiday on consumption.
NBS data showed China’s retail sales, a key measurement of consumer spending, rose 3.7% year-on-year in May versus the 2.3% rise in April.
China’s value-added industrial output grew by 5.6% in May, while fixed-asset investment increased by 4% in the January to May period.
“Looking ahead, China’s economy will likely continue the recovery trend with innovations gaining further momentum, ongoing industrial upgrading, a gradual recovery in domestic demand and strong policy stimulus,” Liu told a news conference held in Beijing.
Meanwhile, she cautioned that the correction in China’s property sector is still ongoing.
For the January to May period, China’s property investment fell 10.1% year-on-year, while the sales area of new properties slumped 20.3%, compared with 9.8% and 20.2% falls in the first four months, respectively, said the NBS.
Liu said the implementation of a series of recently eased housing policy measures will gradually stabilise the property sector.
Zhou Maohua, a researcher at China Everbright Bank, said the latest data suggested that the recovery in domestic consumption and demand is steadily gathering steam, pointing to a more balanced recovery in the world’s second-largest economy.
“Given the steady demand recovery, the resilient exports and the low base effect, China’s economic growth will likely accelerate in the second quarter, laying a solid base for achieving an annual growth target of around 5% this year,” he said.
While the potential improvement in consumption and a factory boom may help offset the housing slump in the second half of the year, Zhou called for stronger policy efforts to deal with the persistently low prices and further housing easing policies.
“More forceful property easing measures, rather than the slow-drip of incremental measures seen last year, are now necessary and likely if authorities were to successfully engineer a desired shallow house price correction path,” said Louise Loo, lead economist at British think tank Oxford Economics. — China Daily/ANN
