Is China Back?
China’s economy showed some signs of progress in July, but the country also fell short of some expectations raising questions about the global recovery.
China’s industrial sector boomed in July growing nearly 5%, which emphasized the sector’s importance as the main engine for growth. This was the fourth consecutive month of industrial growth after the contraction that followed the initial COVID-19 outbreak.
However, the retail sector has been slower to recover. Analysts expected July to be the first month of retail sector growth since the start of the pandemic, but the sector shrank by 1.1%. Imports to the country also fell by 1.4% in July indicating that Chinese consumer spending has not recovered the way production has.
This slow recovery of the Chinese consumer market is significant because it could lead to a slower recovery around the world. Because the outbreak started in China, the country was also one of the first places to experience economic recovery. Some economists predicted that Chinese consumer spending could help fuel the recovery of other countries. However, the global economy will likely take more time to bounce back if Chinese consumers remain reluctant to return to their pre-pandemic spending habits.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.