BACK IN THE SADDLE

Economy rebounds as supportive policies activate reset button

with new growth momentum due to innovation-oriented growth drivers, Xu Hongcai, Deputy Director of the Economic Policy Commission, China Association of Policy Science, told Beijing Review. The epidemic, while causing offline industries to suspend work at its peak, gave a boost to new business and work modes, which meant a strong impetus for China’s digital economy. As people stayed at home, e-commerce, food delivery, online education and work-fromhome platforms boomed; new technologies such as virtual reality rode the tide with wider applications.

But the global spread of the epidemic may pose fresh challenges to the economy amid the downturn in global economic growth. So the Chinese Government will issue more supporting measures in the coming quarters to steady foreign trade while expanding domestic demand to boost investment and consumption, Mao said.

Recovery on the way

in Q1, the hi-tech manufacturing saw fast expansion with a year-on-year increase of 8.9 percent in March.

According to Mao, the sub-index for business activities in the service sector stood at 51.8 in March, surging 21.7 points from February. Service industries such as transportation, retail sales and courier saw notable rebound as online consumption continued during travel restrictions. According to a statement released by the State Post Bureau on April 13, the business revenue of China’s postal industry totaled 219.22 billion yuan ($31.18 billion) in Q1, up 0.8 percent year on year.

Given the impact of the epidemic, the reading of the consumer-oriented service industries was 50.2 in March, 1.6 points lower than the overall index. Revenues of the catering sector, one of the worst-hit industries, slumped 44.3 percent in Q1 compared with the same period last year. However, the catering industry and tourism across China are gradually warming up although not yet fully recovered. The demand for online services during the special time drove the growth of Internet and related services as well as software and information technology services, which went up by 10.1 percent and 0.7 percent respectively in January-february.

Market activities in the dampened investment sector started to revive in March. Fixed assets investment in infrastructure and real estate reported a smaller decline of 16.1 percent year on year in Q1, compared with the 24.5-percent drop in January-february.

“Although some infrastructure projects are delayed due to the epidemic, the rising investment in new infrastructure for innovation-oriented growth in the second half of this year can improve the contribution of investment to China’s economic growth,” Xu said.

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