By Jonathan Cheng
BEIJING--China's post-coronavirus recovery has been strong but
uneven. A burst of data released Friday, however, suggests the
world's second-largest economy is rebalancing as consumer
spending-- the weak link so far in the recovery--picks up
A private gauge of activity in China's service sector soared in
April to its highest level this year, while tourist travel and some
consumer spending exceeded their pre-virus levels during a five-day
holiday that ended Wednesday.
At the same time, China's export sector, the key driver of the
country's economic recovery in the past year, surprised economists
by posting yet another month of resilient growth, driven this time
by increased shipments to India and other countries battered by
recent resurgences of the virus.
China's outbound shipments jumped 32.3% in April compared with a
year earlier, data from the General Administration of Customs
showed Friday--higher than March's 30.6% year-over-year increase
and far outpacing the 21% gain predicted by economists polled by
The Wall Street Journal.
Stripping out the impact of the pandemic, last month's exports
were 36.3% higher than they were two years ago in April 2019, the
customs bureau said.
Exports to India jumped sharply in April, rising 144% compared
with the year before, up significantly from March's 19%, as China
shipped more Covid-19-related medical supplies to its hard-hit
neighbor. Shipments to Southeast Asian countries also accelerated,
surging 40% year-over-year in April, compared with March's 16%
The worsening pandemic across parts of the developing world have
shut down their production capabilities while increasing demand for
Chinese-made personal protective equipment, said Lu Ting, a Hong
Kong-based economist for Nomura.
The export surprise helped widen China's trade surplus to $42.85
billion at the end of April, up from March's $13.8 billion and
wider than economists' estimate of $28.2 billion. That was despite
an increase in Chinese imports, which also beat market expectations
to rise 43.1% in April from a year earlier, boosted by soaring
Since it began reopening its economy this time last year,
China's recovery has been powered by its factories, which have
cranked out large volumes of medical equipment and electronic
products to the rest of the world. Resilient demand for Chinese
goods helped the country's recovery defy expectations of a slowdown
and secured China's status as the only major economy to post growth
Less impressive, at least so far, has been the services sector,
which has failed to keep pace with the manufacturing sector's
recovery. The contrasting performances heightened imbalances last
year in China's economy, which economists and policy makers have
said needs to tilt more in favor of domestic consumption.
Those hopes, however, have repeatedly been dashed by periodic
flare-ups in Covid-19 infections in various pockets of the country,
keeping consumers on their toes.
Now, with the last coronavirus resurgence having been brought
under control for several months, Chinese citizens--still confined
within their own borders--are beginning to open up their wallets
In April, the Caixin China services purchasing managers index, a
private gauge of services activity, rose to 56.3, up from 54.3 in
March and hitting the highest level since December, Caixin Media
Co. and research firm IHS Markit said Friday.
A reading above 50 indicates expansion, while a reading below 50
Strong overseas demand for some Chinese services--such as
consulting and other knowledge-intensive work--played a big role in
boosting activity in the sector, prompting companies to add to
their staffing levels for a second straight month, Caixin said.
But traditional consumer spending is also picking up.
During the five-day Labor Day holiday that began on May 1,
official data showed Chinese travelers made a total of 230 million
trips, topping the 195 million trips recorded during the same
holiday in 2019 and marking the first time that traveler numbers
have surpassed their pre-virus levels for any public holiday
normally associated with heavy traffic.
China's box office also broke new records for revenue and
visitor numbers during the five-day holiday. Movie ticket sales
rose to 1.67 billion yuan, the equivalent of $258 million--a 9.4%
increase from the same holiday period in 2019. Movie theaters were
shut down during last year's Labor Day holiday.
"The robust holiday activities suggest consumption, especially
consumer services, is emerging as a new growth driver," Citigroup
economists told clients in a note Wednesday.
Despite the rebound in the number of trips, tourists
collectively spent 23% less money this year than during the same
holiday in 2019, official data showed. Citigroup economists
attributed the cautious consumption to a discounting of travel
products and a shift toward shorter-distance tourism.
For the first quarter of the year, all of China's 31 provinces
reported double-digit percentage growth in gross domestic product
when compared with the year earlier, state media reported Friday.
Hubei province, the original epicenter of the coronavirus, saw its
first-quarter GDP skyrocket by 58.3% from the previous year's
exceptionally low base.
Grace Zhu and Bingyan Wang contributed to this article.
Write to Jonathan Cheng at firstname.lastname@example.org
(END) Dow Jones Newswires
May 07, 2021 07:46 ET (11:46 GMT)
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