In a dramatic turnaround, China’s economy expanded 3.2 percent in the second quarter of 2020, compared to April through June of last year. This success contrasts with the world’s other major economies, which are still reeling from the COVID-19 crisis.
China’s economy had shrunk by 6.8 percent in the first quarter (January-March) compared to the previous year. This was China’s first such contraction since the country began reporting quarterly gross domestic product in 1992.
Previously released data had signaled that an economic turnaround was on the horizon. China’s official NBS Manufacturing PMI (purchasing managers index) and the Caixin China PMI both indicated as much. The official manufacturing PMI for May came in at 50.6 and the Caixin was 50.7; numbers larger than 50 are a sign of expansion.
“May data signaled a further increase in output following February’s record decline, with firms widely mentioning the resumption of works due to an easing of COVID-19-related measures,” Caixin and researcher IHS Markit said in a joint statement.
According to The Wall Street Journal, China’s second-quarter economic growth led to an 11.5 percent rebound from the first three months of the year. Taken together, China’s economy slid just 1.6 percent when compared with the first half of 2019, according to China's National Bureau of Statistics.
The Journal said that China’s second-quarter 2020 growth beat economists' median estimate of 2.6 percent growth. Some estimates said China would actually further contract in the second quarter.
What’s next? Earlier reports predicted that China’s economy would contract for the year, according to a survey. The independent survey of more than 3,300 of the country’s businesses said that second-quarter recovery from the first-quarter plunge had been minimal.
“Until and unless global demand recovers more forcefully, the incremental quarterly improvement just seen will make for a contraction for full-year 2020,” according to the U.S.-based China Beige Book, which described the gains as “marginal.”