冯氏集团-2020Q2中国内贸和外贸季度报告（英文）-2020.8-22页_1mb

China Trade Quarterly Summary

Core Content

This document provides an overview of China's domestic and foreign trade developments during the second quarter of 2020 and the first half of 2020, highlighting the economic recovery and policy responses to the challenges posed by the COVID-19 pandemic.

Domestic Trade

Main Points

• Economic Recovery: China's real GDP growth rebounded strongly from -6.8% yoy in 1Q20 to 3.2% yoy in 2Q20, making it the first major economy to return to growth post-pandemic. The nominal GDP for 1H20 was 45.7 trillion yuan, down by 1.6% yoy in real terms.
• PMI Trends: The manufacturing PMI rose to 51.1 in July 2020, showing an accelerated recovery. Output and new orders indices were strong, while new export orders and backlogs showed contraction.
• NMI Trends: The non-manufacturing PMI remained stable, fluctuating between 53.2 and 54.4, indicating continued recovery in the non-manufacturing sector.
• Consumer Spending: Retail sales remained in contraction in 2Q20, with a predicted recovery to 2.0% yoy in 3Q20. However, the recovery in consumer spending lagged behind industrial production.
• Industrial Production: Industrial production (IP) saw a rebound, with a 4.8% yoy increase in June and July. The overall IP contraction in 1H20 was 1.3% yoy.
• Fixed Asset Investment (FAI): FAI (excluding rural households) dropped to -3.1% yoy in 1H20, the lowest half-year figure on record. However, growth is expected to recover in 3Q20 due to government stimulus.
• Credit Easing: M2 and total RMB loans grew at a faster pace, indicating easing credit conditions. The PBoC implemented targeted monetary policies to support the real economy.

Key Information

• Consumer Discretionary Categories: Suffered the worst drop in retail sales, such as 'gold, silver and jewellery' and 'garments, footwear, hats, knitwear'.
• Basic Consumer Staples: Maintained respectable growth, showing resilience during the pandemic.
• Online Sales: Grew at a strong pace, with 14.3% yoy growth in 1H20, indicating a shift in consumption patterns.
• Government Policies: The NDRC and State Council introduced measures to promote consumption and support exporters in exploring domestic markets.

Foreign Trade

Main Points

• Export Rebound: Exports rebounded in June and July 2020, with a 0.5% yoy growth in June and 7.2% in July, signaling recovering external demand.
• Trade Partners: ASEAN remained China's largest trading partner, but the US overtook it to become the top export market in 1H20.
• Import Trends: Imports declined in 1H20, primarily due to a drop in crude oil and refined oil import values, though import quantities remained stable.
• FDI Recovery: FDI returned to growth in 2Q20, rising 8.4% yoy, despite a 10.8% drop in 1Q20. Overall, FDI in 1H20 was down 1.3% yoy.

Key Information

• Export Categories: Textile exports saw a strong increase in 1H20 due to demand for PPE, while other categories like garments and footwear faced significant declines.
• Import Categories: Crude oil and refined oil imports declined, but China's import of crude oil increased by 9.9% yoy in volume.
• Trading Partners: ASEAN, EU, and US were the top three trading partners, with varying growth rates and export/import trends.

Outlook

• Domestic Recovery: The recovery in the domestic economy is expected to continue, with real GDP growth projected at 5.5% yoy in 3Q20. The focus will be on boosting consumption and stabilizing the non-manufacturing sector.
• Foreign Trade: External demand is expected to recover further in 2H20, with continued support for exports through policy measures and infrastructure development.
• Monetary Policy: The PBoC is likely to further lower interest rates in 2H20 to support the real economy and manage liquidity.
• Government Support: Continued fiscal and monetary support is expected to alleviate economic pressure and sustain recovery efforts.