BEIJING (AP) — Output at Chinese factories rebounded in May, adding to a recovery from the latest COVID-induced economic crisis after the easing of controls that shuttered Shanghai and other industrial hubs.
Industrial production rose 0.7% from a year earlier, recovering from April’s 2.9% contraction, government data showed. Consumer spending rose slightly from April, but was lower than a year ago.
The data suggests a “recovery from lockdown has begun across most sectors of the economy,” Capital Economics’ Sheana Yue said in a report.
China’s case count in its latest wave of infections is low, but the ruling Communist Party’s ‘zero-COVID’ strategy of isolating everyone with the virus has shut down most businesses in Shanghai from end of March and suspended access or imposed other restrictions on other industrial towns. This has fueled fears that global manufacturing and trade will be disrupted.
Most factories, shops and other businesses in Shanghai, Beijing and other cities have been allowed to reopen, but are expected to take weeks or months to resume normal activity.
Economists have cut China’s growth forecast this year to 2%, well below the ruling Communist Party’s target of 5.5%. Some expect activity to contract in the quarter ending in June before a gradual recovery begins.
Consumer spending, depressed by concerns over the economic outlook and possible job losses, rose 0.05% in May from the previous month, but fell 6.7% from a year ago. one year old. Investment in factories, real estate and other fixed assets rose 0.7% from April.
Chinese leaders have promised tax cuts, free rent and other aid to help businesses recover.
“Following all this weak data, we should expect the government to respond with more fiscal stimulus,” ING’s Iris Pang said in a report.
Export growth, reported last week, accelerated to 16.9% in May from 3.7% the previous month. Import growth rose to 4.1% from 0.7% in April.
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