China’s economy stable going in to the second half of 2020
China decided to not set a GDP target following the conclusion of the two sessions meeting in May. This uncertainty for the future implications the virus will have on both China’s domestic economy as well as stability of the global economy lingers as we begin into the second half of the year. The set of interventions made by the Chinese government, however, should see stable growth, but not at the levels seen before the virus. Its strategy is to focus on prevention and control of further outbreaks rather than have a complete return to normal. One trillion yuan of special government bonds has been transferred to local governments to support employment, virus control and other basic needs.
Key Economic Indicators
The consumer price index (CPI) rose by 2.5 percent year-on-year (y-o-y) in June 2020, 0.1 percent higher than May’s 2.4 percent. The producer price index (PPI) fell by 3.0 percent year-on-year (y-o-y). Food prices comprise almost a third of the total weighting of China’s CPI, with a rise in pork and vegetable prices contributing to June’s figure. Pork prices rose 81.6 percent y-o-y, with decreased imports and COVID-19 restrictions contributing to the increase. Vegetables prices surged due to floods in Southern China, as well as partly by the Xinfadi market outbreak in Beijing.
PMI continues expansion at the end of the first half of 2020
China’s purchasing manager’s index (PMI) expanded with the index coming in at 50.9 in June. This follows the 50.6 reading in May, marking the fourth month of expansion since February’s low of 35.7. While China’s initial manufacturing challenges were the closure of factories at the beginning of the year, decreasing demand from international markets as rising COVID-19 cases in key markets for Chinese products have dampened hopes for a strong recovery in the second half of the year. While China is showing signs of stable recovery, the recovery of its trade partners relies on their ability to contain their domestic virus related issues and rebuild their economies.
Inaugural session of the China-Africa Digital Trade Week
In 2019 the first China Africa Trade and Economic Expo was held in Changsha, Capital of China’s Hunan province. The weeklong event that saw thousands of participants and African sellers partake last year could not take place due to the COVID-19 outbreak. The event was instead held on a digital platform, allowing visitors to the platform to search for manufacturers and products online and initiate dialogue with suppliers through video meetings and conferences. Whilst showcasing products, the platform also had a section for investment opportunities across varying economic sectors in Africa.
“This article is produced by Axis Group and is published in The Econometer section of ChinAfrica magazine (July 2020), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.”
