China’s economy bounces back from pandemic contraction

China’s economy has rebounded strongly from a historic contraction. (AFP)
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Updated 17 July 2020

China’s economy bounces back from pandemic contraction

  • But retail sales fell short of forecasts, suggesting that consumer reticence to go out and spend may delay a full recovery

BEIJING: China’s economy returned to growth in the second quarter following a coronavirus contraction, with President Xi Jinping promising continued expansion ahead and urging foreign companies to be a part of it.

The forecast-beating figures released on Thursday follow a string of data showing the world’s number two economy slowly emerging from the pandemic, and should provide hope to other governments looking to recover from a crisis that has likely caused a global recession.

Gross domestic product expanded 3.2 percent in April-June, the National Bureau of Statistics (NBS) said, smashing expectations and a massive improvement on the 6.8 percent contraction in the first quarter.

In a letter to members of the Global CEO Council, Xi said “the fundamentals of China’s long-term economic growth have not changed and will not change,” according to state media.

He reiterated pledges to continue opening up an economy that many foreign businesses say offers unfair advantages to Chinese companies, and added that it was “the right choice to stay rooted in China.”

However, in a sign that full recovery could take time, retail sales — a key indication of consumer sentiment — fell short of forecasts, shrinking 1.8 percent on-year in June, suggesting continued reticence about going out to spend even as the virus appears largely under control in China.

The data also failed to lift Asian markets, led by Shanghai, which tanked 4.5 percent having rallied around 15 percent this month.

“No matter how much stimulus and fiscal sugar you try to entice consumers with, they will not leave their apartment and go on a spending spree until they feel confident the landscape is virus-free,” said AxiCorp strategist Stephen Innes.

The retail sector occupies an increasingly crucial role in China’s economy as leaders look to consumers, rather than trade and investment, to drive growth.

A domestic consumption pick-up is especially needed as external demand weakens, but Innes noted it is easier to normalize supply than demand.

Louis Kuijs, of Oxford Economics, said household consumption remains the “weakest link” among indicators, although China’s economic upturn is expected to continue in the second half of 2020.

Economists warn, however, that official Chinese figures should be taken with a grain of salt, with longstanding suspicions they are massaged upward for political reasons by a ruling Communist Party that bases its legitimacy on delivering continued prosperity.

“Is it too good to be true?” ING chief economist for Greater China Iris Pang asked, saying that more data was needed. She pointed to risks down the road including trade and tech tensions with other economies, particularly the US.

Economists also warn of uncertainty owing to an uneven recovery — growth in infrastructure investment has rebounded, but private fixed-asset investment and retail sales remained weak.

As if mindful of the concerns, Xi pledged that “China will foster new opportunities and create new prospects for Chinese and foreign enterprises,” and will implement growth-oriented policies, his letter said, according to Xinhua.

The coronavirus, which first emerged in the city of Wuhan late last year, has since shut businesses and destroyed millions of jobs globally, likely tipping the world economy into recession.

Growth beat the 1.3 percent gain tipped in an AFP poll of analysts but remains among China’s lowest quarterly expansion rates on record. The economy contracted 1.6 percent on-year in the first six months, the NBS said, and urban unemployment dipped to 5.7 percent in June from 5.9 percent a month earlier.

Unemployment is a closely watched marker, with nearly nine million graduates expected to enter an uncertain labor market this year and analysts saying actual joblessness is likely higher.

NBS spokeswoman Liu Aihua said China’s economy was staging a “gradual recovery.” But it is “still under pressure” as the pandemic ravages many of China’s key trading partners.

China is expected to be the only major economy to see growth in 2020, being the first hit by the virus and to bounce back.


Biden announces return to global climate accord, new curbs on US oil industry

Updated 21 January 2021

Biden announces return to global climate accord, new curbs on US oil industry

  • Biden has promised to put the United States on a track to net-zero emissions by 2050

WASHINGTON: US President Joe Biden on Wednesday announced America’s return to the international Paris Agreement to fight climate change, the centerpiece of a raft of day-one executive orders aimed at restoring US leadership in combating global warming.
The announcements also included a sweeping order to review all of former President Donald Trump’s actions weakening climate change protections, the revocation of a vital permit for TC Energy’s Keystone XL oil pipeline project from Canada, and a moratorium on oil and gas leasing activities in the Arctic National Wildlife Refuge that Trump’s administration had recently opened to development.
The orders by the newly sworn-in president will mark the start of a major policy reversal in the world’s second-largest greenhouse gas emitter behind China, after the Trump administration pilloried climate science and rolled back environmental regulation to maximize fossil fuel development.
Biden has promised to put the United States on a track to net-zero emissions by 2050 to match the steep and swift global cuts that scientists say are needed to avoid the most devastating impacts of global warming, using curbs on fossil fuels and massive investments in clean energy.
The path will not be easy, though, with political divisions in the United States, opposition from fossil fuel companies, and wary international partners concerned about US policy shifts obstructing the way.
“We got off track very severely for the last four years with a climate denier in the Oval Office,” said John Podesta, an adviser to former President Barack Obama who helped craft the 2015 Paris Agreement. “We enter the international arena with a credibility deficit.”
Biden’s orders also require government agencies to consider revising vehicle fuel efficiency standards and methane emissions curbs, and to study the possibility of re-expanding the boundaries of wilderness national monuments that had been reduced in size by the Trump administration.
While environmental advocates were thrilled by the orders, industry groups and conservatives criticized them.

Alaska’s Republican Governor Mike Dunleavy mocked Biden’s decision to shut down oil and gas work in the Arctic National Wildlife Refuge, saying the new president “appears to be making good on his promise to turn Alaska into a large national park.”
The American Petroleum Institute, the nation’s top oil and gas industry lobby group, meanwhile, said it believed blocking the Keystone XL oil pipeline was a “step backward.”
“This misguided move will hamper America’s economic recovery, undermine North American energy security and strain relations with one of America’s greatest allies,” API President Mike Sommers said.
Global counterparts and climate advocates welcomed Washington’s return to cooperation on climate change, but expressed some skepticism about its staying power and its ability to overcome domestic political turmoil.
Trump withdrew the United States from the 2015 Paris deal late last year, arguing it was too costly to the US economy.
“The United States continues to be the one and only country that has withdrawn from the Paris Agreement, making it, frankly, the pariah of this multilateral agreement,” former UN climate chief Christiana Figueres, told Reuters.
Biden can regain US credibility by “doing the domestic homework” of ambitious climate action at home.
Brian Deese, Biden’s director of the National Economic Council, told Reuters that the United States hopes to encourage other big emitters to also “push their ambition, even as we have to demonstrate our ability to come back on the stage and show leadership.”
Pete Betts, an associate fellow at London-based think tank Chatham House who led climate negotiations for the European Union when the Paris deal was struck, said the United States will need to match its promises with financial commitments too.
The United States under Obama pledged to deliver $3 billion to the Green Climate Fund to help vulnerable countries fight climate change. It has delivered only $1 billion so far.
“The US will need to put some money on the table, and also encourage others to do the same,” he said.