A slew of Chinese economic data was published on Wednesday, showing that, despite the COVID lockdowns across the country, the world’s second-largest economy saw better-than-expected industrial output and retail sales levels. In fact, industrial output grew 0.7% in May compared to last year, after falling 2.9% in April, according to government data. Retail sales were still down from last year but less than expected.
This was supported by the loosening COVID rules and strong global demand. With factories resuming operations, Chinese exports grew double digits in May. With this, Chinese stocks were the best performing in Asia on Wednesday amid the global sell-off. In the background, Beijing’s review of video gaming licenses and other moves suggesting that the government was easing its crackdown on the tech sector have helped the nation’s tech companies’ stocks remain resilient.
“We should not be overly optimistic about consumption as the recovery has been quite slow. Affected by repeated COVID outbreaks, slower income growth, a cautious view of the future expectations, there will not be a revenge spending, as people have expected,” said Wang Jun, chief economist at Zhongyuan Bank. “The short-term trend of recovery in June is becoming obvious, but the economy is still some distance away from normal operations.”
“We are seeing some improvements in May which are certainly positive to market sentiments,” said Redmond Wong, market strategist at Saxo Capital Markets. “The key is now whether the COVID situation can remain contained and if there’s a resumption of more stringent pandemic control measures.”