JD economist: China remains in 'recovery mode' despite uneven growth
By CGTN Global Business
04:54

China's economy continues to be in "recovery mode" overall, with signs of increased production but a lag in demand, said Shen Jianguang, vice president of e-commerce group JD Group on Monday.

Major indicators released on Monday showed that industrial output, consumption and investments all saw monthly improvements, though not as fast as economists were expecting.

China's National Bureau of Statistics showed the country's industrial output rose for a second straight month in May, up 4.4 percent from a year ago. Retail sales, however, continued a fourth straight month of decline at 2.8 percent, though significantly less than the 7.5-percent slump in April.

Fixed asset investment declined 6.3 percent in January to May from the same period last year, compared with a 10.3 percent tumble in the first four months of the year.

Shen, who is also the chief economist of JD Digits, the fintech and digital arm of JD.com, told CGTN that recovery was "well under way" though pace of recovery was uneven.

"I think it's quite clear that it's a cross-border recovery. I think the most important trend is the pick up of investments, especially infrastructure investment which is actually recovering very strongly," said Shen.

Economist: Demand still a question mark

Shen said that while investment and industrial production have been positive over the last two months, and remained on a path of recovery, he admitted that "the biggest worry is probably external demand."

"That is actually a big question mark. The pandemic is still going on globally. But we have already seen positive signals from the U.S. and Europe, with some countries are reopening cities. That will probably make external demand recover a bit. But I think it is probably a weak recovery," he said.

"So I can say the recovery is well under way, but there's uneven pace. Production recovered faster, and the demand is still lagging behind," he said.

As for domestic demand due to fears of a new wave of coronavirus infections, Shen said he hoped that the cases were isolated in Beijing, which means a limited impact nationwide.

There appears to be a surplus in supply, which dampens prices, contributing to a 3.7-percent-year-on-year deflation in the producer price index (PPI), he said.

As for retail sales, Shen said he expects June numbers to be positive. "We are seeing less negative numbers for retail sales...very likely we will see the first positive numbers for retail sales numbers in June this year," he said.

Shen added that the fiscal measures announced at the country's recent National People's Congress provided a very strong boost to the business confidence.

"Strong fiscal measures were announced... I think altogether it's almost four percent of GDP fiscal stimulus. I think that is definitely boosting business confidence," he said, pointing to a one trillion yuan special bond, an additional 1.6 trillion yuan of local government bonds, in addition to another one trillion extra fiscal deficit.

Shen said another aspect to growth was the government's support for companies in the drive for more "new infrastructure" investments.

"So in 5G and also in digital technology-related infrastructure that is important for the digital economy, like data centres, and also AI and Big Data. So I think that would also create another boost to investments," he said.

(Cover image via VCG)