According to official government data, Chinese industrial production grew in April.
Output from China’s factories increased for the first time this year as the world’s second-largest economy slowly emerged from its coronavirus quarantine, though consumption remained depressed amid increasing job losses.
Chinese industrial production rose 3.9% in April from a year earlier, according to Friday’s data, up more than the 1.5% forecast in a Reuters analyst survey and after a 1.1% drop. in March.
After months of confinement, China is reopening its economy, having managed, according to its official media, to contain the outbreak. Oil, coal, metal and electricity production increased with the plants restarting operations in April.
However, China continues to face major challenges in its service sector, particularly in retail, in addition to the indirect impact of the pandemic’s effect on the rest of the world, damaging other economies and major trading partners.
On the eve of Parliament’s annual meeting to be held next week, economic leaders are particularly concerned about the prospect of rising unemployment, which poses major political risks for a country of 1.4 billion people.
China’s economy contracted for the first time since at least 1992 in the first quarter as restrictions to curb the spread of the virus closed factories and shopping malls.
Although much of the economy has reopened, many manufacturers are struggling with downsizing or canceling overseas orders as global demand falters. Earlier this week, economic reports showed that output prices fell at their fastest rate in four years as industrial demand weakened.
While exports rose unexpectedly in April, driven in part by demand for medical supplies, imports fell more sharply than anticipated, indicating weak domestic demand.
More telling was the collapse of export orders seen in various factory surveys for April, which has major implications for the industrial sector, a major job generator in China.
Liu Aihua, a spokesperson for the National Statistics Office, said the unemployment pressure remained “relatively large.”
China’s unemployment rate in April stood at 6.0%, slightly higher than the previous month.
There is great interest in analyzing the situation of migrant workers, who are an important part of the labor force in China and are often not counted in official data.
According to Liu, the number of migrant workers who returned to their places of work from their places of origin in April was 90% compared to the levels observed in previous years.
However, Julian Evans-Pritchard, an economist at Capital Economics for China, said that figure is probably closer to 80%, suggesting that true unemployment is twice the official rate.
Unemployment pressures are likely to put pressure on household finances and drag consumption.
Consumer spending remained weak in April, as retail sales fell 7.5%, a larger-than-expected decline – 7.0% – further prolonging the decline in the first three months of the year, when stores and restaurants across the country closed.
Investment in fixed assets fell 10.3% in January-April, compared to the 10.0% expected drop and the 16.1% decrease in January-March.
Investment in fixed assets from the private sector, which represents 60% of total investment, fell 13.3% in January-April, compared with a decrease of 18.8% in the first three months of the year.
China’s real estate sector, however, showed some resistance as real estate investment accelerated in April, while property sales fell at a much slower rate, providing some relief for the authorities.