China's economy on track of recovery as signs show consumption rebounds
15 May 2020


China's economy is on the track of recovery as an increasing number of signs recently showed domestic consumption rebounds, reported the Xinhua-run Shanghai Securities Journal Thursday.


Soaring sales of excavators


The sales of excavators, which is an important indicator of economic development, continued to grow in April over the data in March and set a new record high.


Data from the China Construction Machinery Association showed that the number of excavators sold by the 25 surveyed manufacturers reached 45,400, showing a year-on-year increase of 60 percent. This is the first time in a year that the excavator sales has grown at a rate of over 50 percent.


Many institutions predicted that the relevant sales data in May will continue to break the historical record with a year-on-year growth rate of more than 50 percent.


Behind the surging sales of excavators is the accelerated construction of large-scale infrastructure and real estate projects, according to Guoyuan Securities.


The Chinese securities brokerage stated that the sales of excavators used to decline at the end of the second quarter in previous years. However, due to the expansion of infrastructure construction scale and the substantial reduction of construction period this year, the demand for mechanical equipment is expected to experience a hike.


Accelerated construction of large-scale infrastructure projects


The construction of major infrastructure projects in many places has accelerated since April. Provinces such as Hubei, Hunan, Guizhou, Jilin, and Zhejiang have launched a number of major projects with investment totaling hundreds of billion yuan.


For example, on Tuesday and Wednesday alone, Hubei province kicked off 95 transportation infrastructure projects involving investment of nearly 51.37 billion yuan.


A host of polices were issued recently to provide financial support for infrastructure construction projects.


To name a few, another one trillion yuan of relevant special bonds were approved at the meeting of the State Council held on May 6.


Besides, the launch of the new financing mode of real estate investment trusts (REITs) will activate infrastructure stock assets at hundreds of trillion yuan level.


Zhu Jianfang, chief economist with CITIC Securities, expected that infrastructure investment would increase at a higher rate in April and drive the fixed asset investment to grow by three percent year on year.


Auto, service consumption rebound


Consumption in traditional industries, especially in automobile, is recuperating at a faster pace.


In April, 2.07 million units of vehicles were sold, up 4.4 percent year on year and putting an end to 21 consecutive months of decline, according to figures from the China Association of Automobile Manufacturers.


The consumption in tourism, catering, culture, entertainment and other service sectors has gradually grown stronger out of the COVID-19.


For instance, during the May Day holiday, the online retail sales of physical goods in China increased 36.3 percent year on year. The number of e-commerce live streaming sessions doubled and live streamed goods rose 4.7 times year on year.


These figures all showed the resilience and vitality of the markets in China, said Wang Bingnan, deputy minister of the Ministry of Commerce.


As businesses engaged in commodity sales resume operation, the market supply capacity has returned to the level of last year, said Zhao Ping, director with the international trade research department under the Academy of China Council for the Promotion of International Trade, expecting that the consumption of cultural, sports, tourism and other services would pull through in the second quarter.


Source: Xinhua Silk Road