China’s economy grows 3.2% as virus lockdowns lifted

BEIJING  — China became the first major economy to grow since the coronavirus pandemic began, recording an unexpectedly strong 3.2% expansion in the latest quarter as anti-virus lockdowns were lifted and factories and stores reopened.

Shoppers pass through an affluent shopping district in Beijing on Tuesday, July 14, 2020. China’s economy rebounded from a painful contraction to grow by 3.2% over a year earlier in the latest quarter as anti-virus lockdowns were lifted and factories and stores reopened. (AP Photo/Ng Han Guan)

The growth reported Thursday was a dramatic improvement over the previous quarter’s 6.8% contraction — China’s worst performance since at least the mid-1960s. But it was the weakest positive figure since China started reporting quarterly growth in the early 1990s.

The latest figure “underscores the robust recovery China’s economy is going through,” Louis Kuijs of Oxford Economics said in a report. “We expect the upturn in China’s economy to continue.”

The coronavirus pandemic began in China in December. It was the first economy to shut down and the first to start the drawn-out process of recovery in March after the ruling Communist Party declared the disease under control.

“The national economy shifted from slowing down to rising in the first half of 2020,” the National Bureau of Statistics said in a statement.

The government has promised more support for job creation and is pumping money into the economy through higher spending and bank lending.

But Beijing has avoided joining the United States and Japan in rolling out stimulus packages of $1 trillion or more due to concern about adding to already high Chinese debt.

Manufacturing and some other industries are almost back to normal operating levels. But consumers wary of losing their jobs have curbed their spending. Cinemas and some other businesses still are closed and restrictions on travel stay in place.

Economists say China is likely to recover faster than some other major economies due to Beijing’s decision to impose the most intensive anti-disease measures in history. That included cutting off most access to cities with a total of 60 million people and suspending trade and travel.

In the three months ending in June, factory output rose 4.4%, a sharp rebound from the previous quarter’s 8.4% contraction as factories that make the world’s smartphones, shoes, toys and other goods reopened.

Retail sales shrank by 3.9%, but that was much better than the previous quarter’s 19% contraction while millions of families were confined to their homes and shopping malls were shut down.

Exports grew by an unexpectedly strong 0.4% in June but still are off 3% for the first half of the year. June imports rose 3% — including a 10.6% jump in purchases of U.S. goods despite a tariff war — but are down slightly for the year.

Forecasters warn that exporters are likely to face another decline in global demand as sales of masks and other medical supplies taper off and U.S. and European retailers cancel orders.

A potential stumbling block is worsening relations with the United States, China’s biggest national export market. Relations with the Trump administration have soured over trade, technology, human rights and Hong Kong.

The two governments signed an agreement in January to postpone further tariff hikes in their fight over Beijing’s technology policies and trade surplus. But most increases already imposed remained in place.

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