Insufficient domestic demand major challenge for economy

As the resurgent COVID-19 pandemic that hit parts of China earlier this year increasingly comes under better control, economic recovery is gradually taking shape. But due to outbreak disruptions that continue to periodically appear, no signs of a sustained economic rebound were evident as of the end of June. Less-than-stellar data in consumption, investment and market confidence show that mild recovery rather than a robust rebound is more likely in the second half.

As the peak of outbreak disruptions recedes, policies regarding population flows and transportation have been adjusted accordingly. Recoveries in logistics, business activity and daily consumption have been quite noticeable.

In April, the purchasing managers' index for manufacturing and nonmanufacturing sectors withered to 47.4 and 41.9, respectively. However, the two indicators climbed to 49.6 and 47.8 in May and clawed back to expansionary territory one month later with readings of 50.2 and 54.7.