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ECONOMY: No Economic Growth Target for 2020
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No Economic Growth Target for 2020
罕见!2020年不设GDP增速具体目标
By Morgan Brady

BT 202007 ECONOMY 01The government has decided not to set an economic growth target for 2020. Cases of the coronavirus are resurging in Beijing and the world economic and trade environment is not supportive of growth. Many factors are standing as an obstacle in the face of growth.
 

The Chinese economy shrank by 6.8% in the first four months of the year, which is the first contraction on record. In the second quarter the gross domestic product (GDP) growth may return to 2% or 3% as factories step up production.
 

China was struggling with a slowing economy before the virus hit hard, and it is currently trying to spend its way out of the slump. The country will pump 3.6 trillion yuan ($500 billion) into its economy this year, to be spent on infrastructure projects and tax cuts. The purpose is to create around 9 million jobs and mitigate the fallout from the pandemic. This will likely drive a strong recovery in imports.
 

Some analysts are predicting that the central bank will be cutting both the interest rates and the required reserve ratio (RRR). This will lower the amount of cash that banks are required to hold in reserves, and will also make borrowing more affordable.
 

政府已决定不设定2020年的经济增长目标。在受新冠病毒重创之前,中国一直在与经济放缓作斗争,而中国目前正努力摆脱萧条。今年政府将向市场注入3.6万亿人民币(约合5,000亿美元),用于基础设施建设和减税。
 

The Chinese economy is starting to recover

A man wearing a protective face mask walks in a nearly empty shopping mall in beijingA man wearing a protective face mask walks in a nearly empty shopping mall in beijing

The Chinese economy did show some recovery when stores and factories reopened after witnessing a nose-dive when most businesses closed during lockdown. Despite this, many consumers are still concerned about getting infected and they have not spent money on products. The economy seems to be dipping a second time before embarking on a more sustainable recovery.
 

China has turned its factories back on after bringing the coronavirus outbreak largely under control within its borders, but weak sales at stores raise fears about a possible second downturn. Imports in May declined 16.7% from a year earlier. It was the deepest contraction since January 2016, suggesting domestic demand remains sluggish.
 

Shipments of smartphones to stores in China went up 17% from a year ago, and the country’s industrial production increased very fast in May, as it was 3.9% higher than last year. Those developments make economists more optimistic.
 

中国经济开始复苏

经历了大多数企业停业关闭之后,中国的经济确实出现了复苏。但销售疲软引发了人们对可能再次出现下滑的担忧。中国5月出口按美元计价同比下降3.3%,由于市场预期的下降7%,进口同比下降16.7%,为2016年1月以来最大降幅,不及市场预期的下降9.7%。但5月份中国的工业生产增长非常快,比去年增长了3.9%,这使经济学家对经济复苏表示乐观。
 

Factories output rises less than expected in China

An employee works on a production line manufacturing steel structures at a factory in HuzhouAn employee works on a production line manufacturing steel structures at a factory in Huzhou

The Chinese economy shrank in the first three months of this year, while inventories of unsold goods are piling up. As the virus spreads, factories are producing clothes and electronics faster than consumers in China or overseas want to buy them. China’s industrial output growth quickened to 4.4% in May from a year earlier. It was the highest percentage increase since December, but the gain was smaller than expected.

BT 202007 ECONOMY 03Sales have fallen for four straight months as shops, restaurants and other crowded places closed during the coronavirus pandemic. A collapse in export orders amid global lockdowns has left factories more reliant on domestic demand, which is recovering at a more sluggish pace. Overseas orders dwindled, and the retail sales fell more sharply than expected.
 

Consumer prices and the export of goods

The producer price index PPI the price charged to buyers from producers at the factory gates is teetering on the brink of deflationThe producer price index (PPI), the price charged to buyers from producers at the factory gates, is teetering on the brink of deflation

In May, the consumer price went up by 2.4% year on year, and down by 0.8% month on month. The prices for tobacco and food went up by 8.5% year on year, those of clothing went down by 0.4%, articles and services for daily use increased by 0.1%, health care went up by 2.1%. The investment in fixed assets was 19,919.4 billion yuan. It decreased by 6.3% from a year earlier.
 

The total value of exports and imports of goods in the first five months of the year was 2,469.6 billion yuan. This was a decrease of 4.9% year on year. The total value of exports was 1,456.2 billion yuan in May, which is a 1.4% increase, and the total value of imports was 1,013.4 billion as it went down by 12.7%.
 

There was a study increase in investment in education and the healthcare sector. There was also growth in production of information transmission, real estate, and financial intermediation services. The wholesale, accommodation, and retail trades suffered a decline from a year earlier. The total value added of the industrial enterprises above the designated size grew in May, indicating that the production machine is still working.
 

消费价格与商品出口

5月份,全国居民消费价格指数(CPI)同比上涨2.4%,环比下降0.8%。扣除食品和能源价格的核心CPI同比上涨1.1%,涨幅与上月持平。从数据走势来看,CPI同比涨幅近几个月内呈现逐步回落走势,为货币政策打开更大空间。5月份,货物进出口总额24696亿元,同比下降4.9%。其中,出口14562亿元,增长1.4%;进口10134亿元,下降12.7%。进出口相抵,贸易顺差4427亿元,比4月份扩大1246亿元。
 

Conclusion

There are still many challenges standing in the way of recovery, but China is doing all it can to climb out of that economic decline. In the remainder of 2020, the Chinese economy would need to show strong recovery, and the recent signs are positive.

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