China’s economic recovery under threat from fresh coronavirus outbreaks and floods, analysts say
- China avoided a recession after its economy grew by 3.2 per cent in the second quarter of 2020, although retail sales remain fragile
- Floods have so far affected 27 of China’s provincial-level jurisdictions, while fresh outbreaks have been detected in the likes of Xinjiang and Liaoning
Fresh clusters of coronavirus cases along with severe flooding may hold back China’s recovery from the pandemic as consumption and construction are likely to be hit, according to analysts.
But consumption, which was badly hit by the coronavirus, remains a fragile spot for China after retail sales – a key measurement of consumption fell by 1.8 per cent in June, although this was better than the 2.8 per cent decline in May.
“Consumption remains weak. Retail sales are stabilising, but even in June, remained below the levels recorded at the same time in 2019,” said S&P Global Ratings Asia-Pacific chief economist Shaun Roache. “Export growth stays patchy given the stuttering recovery in the rest of the world.”
Some enterprises … reported that flood-related disasters caused disruptions to logistics and transportation, along with problems like flooding in plants, equipment and inventory
And China’s road to recovery might be held back by some of the heaviest rainfall on record, bringing in its most punishing flood season, which is set to disrupt manufacturing and construction, a key driver for China’s growth in the last quarter.