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China: growth above estimates at 3.2%

On the 16th of July, the Beijing National Statistical Authority published thier etimates of the performance of the first half of the year, according to which the economy of mainland China grew in the second quarter at a rate of 3.2% compared to the same period of the previous year, and 11.5% compared to the first quarter of 2020. On a six-monthly basis, gross domestic product contracted by -1.6%.

The recovery, which follows the drastic contraction of -6.8% recorded in the first quarter, is higher than expected, achieved thanks to fiscal and social policies supporting economic activities. New incentives have enabled companies to reduce operating costs, gain liquidity and boost employment, the stability of which has always been a key issue for the Chinese government.

After growing at 6.1% in 2019, Beijing reacted with restrictive measures that strongly influenced the performance of the first quarter. The lockdown has postponed the National People's Assembly, which concluded for the first time without confirmation on the growth target, one of the most anticipated data points for global markets.

The International Monetary Fund (IMF) estimates, published in the World Economic Outlook in June, forecast growth of 1% for the Chinese economy in the year 2020, followed by a strong rebound in 2021, where growth is expected to be 8.2%. The IMF's estimate for Beijing's performance is the best of all regions in the world. The IMF Outlook confirms a contraction of the global economy in 2020 of 4.9%, with the advanced countries facing the greatest impact (-8% for the United States, -10.2% for the Euro area, -12.8% for Italy and -5.8% for Japan).

The second quarter results therefore signify the relaunch of growth in China, according to data from the National Bureau of Statistics of China, which is also supported by improved economic forecasts for neighboring countries, with the ASEAN association (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) falling -2% in 2020 to grow by 6.2% in 2021.

China remains closed with a travel ban on international travellers, however it is taking a calculated approach in reopening the economy, in contrast with the Washington, Brussels and the rest of the world.

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