China's economic recovery continues in May with COVID-19 largely under control: expert

Aerial photo taken on June 7, 2020 shows the Tawan Xingshun International Night Market in Shenyang, northeast China's Liaoning Province. (Xinhua/Pan Yulong)

As China has become a domestic-demand driven economy, a possible COVID-driven global recession is unlikely to derail China's ongoing economic recovery, according to a U.S. investment expert.

WASHINGTON, June 19 (Xinhua) -- China's economic recovery continued in May with consumer spending, manufacturing and investment all "bouncing back strongly" and the COVID-19 pandemic largely under control, according to a U.S. investment expert.

"When thinking about prospects for the Chinese economy, one of the most important factors is whether the coronavirus remains under control," Andy Rothman, investment strategist at San Francisco-based investment firm Matthews Asia, wrote in an analysis earlier this week.

People exercise in the open air as the COVID-19 pandemic wanes in Wuhan, capital of central China's Hubei Province, April 16, 2020. (Xinhua/Xiao Yijiu)

At the moment, "a combination of testing, contact tracing and social distancing, as well as strict quarantine of all international arrivals seems to be keeping the virus largely at bay," he said.

Noting that businesses in China have gradually been opening and life is starting to return to normal, Rothman said the recovery of sales of autos and homes in May reflected that "middle-class and wealthy consumers have both sufficient money and enough confidence in the future to spend it."

"And it wasn't only big-ticket items that bounced back last month. Sales at food services and drinking places rose 31 percent month-on-month in May after a 26 percent MoM increase in April," he said.

People visit a night market at Baocheng Road in Wuhan, central China's Hubei Province, June 1, 2020.(Xinhua/Xiong Qi)

While unemployment remains a concern, the absence of social unrest and the rebound in consumer spending suggests that the Chinese government's support for workers and businesses "has provided a cushion for many who lost their jobs," laying the foundation for an economic recovery, said the expert.

Rothman also noted that this healthy economic recovery has come without a dramatic stimulus, as credit growth has only accelerated modestly.

People have leisure time at a street in Shanghai, east China, June 7, 2020.(Xinhua/Chen Fei)

"This highlights the strength of an organic recovery, and leaves the government with plenty of dry powder if the recovery were to falter," he said.

As China has become a domestic-demand driven economy, Rothman believed that a possible COVID-driven global recession is unlikely to derail China's ongoing economic recovery.

"Last year, domestic consumption accounted for almost 60 percent of GDP growth. The gross value of exports was equal to 17 percent of China's GDP, but almost 30 percent of those exports were processed goods for which little value was added in China," he said.