New energy vehicles, which include hybrid and battery-powered cars, have seen an increase in sales in China despite a decline in the overall car market. Pictured here is a named new energy car factory in Jiangsu Province on June 13, 2022.
Wan Shanchao | Visual China Group | Getty pictures
BEIJING – China released economic data for May that topped subdued expectations in a month hampered by Covid controls.
Industrial production rose slightly by 0.7% in May from a year ago, against an expected fall of 0.7%, according to analysts asked by Reuters. In April, industrial production fell unexpectedly, down by 2.9% from the previous year.
Retail sales fell less than expected, down by 6.7% in May from a year ago. Retail sales were estimated to have fallen by 7.1% in May from a year ago, according to the Reuters survey. In April, retail sales fell by 11.1% from a year ago.
Capital expenditure for the period January to May rose by 6.2%, topping expectations of 6% growth.
China’s National Bureau of Statistics said in a statement that the economy “showed good momentum for recovery” in May, “with negative effects from the Covid-19 pandemic gradually overcome and key indicators improved marginally.”
“However, we must be aware that the international environment is going to be even more complicated and gloomy, and the domestic economy is still facing difficulties and challenges for recovery,” the agency said.
China’s exports accelerated in May to a better-than-expected increase of 16.9% from a year ago in US dollars. Imports also increased by 4.1 per cent more than expected.
Shanghai and Beijing, China’s two largest cities in terms of gross domestic product, have both had to reintroduce stricter Covid controls this month after sustained increases in Covid cases.
Shanghai had locked up in April and May, with only a few major businesses in operation. The city began to reopen completely on June 1.
For about a month in May, Beijing had asked people in its largest business district to work from home, while restaurants across the capital could only take takeaway or delivery. Most restaurants in Beijing were allowed to resume food in the store in early June, and staff were able to return to work, but schools have delayed resuming personal lessons.
Uncertainty, especially about future income, has weighed on consumption. Unemployment in China’s 31 largest cities exceeded 2020 highs, reaching 6.7% in April – the highest recorded back to 2018. It rose further in May to 6.9%, while total urban unemployment fell to 5, 9%.
Unemployment for young people aged 16 to 24 rose further to 18.4% in May, up from 18.2% in April.
“I think that as the restrictions are eased and we have monetary policy support going forward, unemployment should fall a bit given that we are well above the government target,” Francoise Huang, senior economist at Allianz Trade, said in a telephone interview last week.
“At the moment, my scenario is that we should see some improvement in the second half of the year,” she said. “It is not [a] “V-shaped setback, rapid and strong upswing or recovery after Covid as we had seen in 2020, because the easing of policy is not so strong and external demand is not so strong.”