China’s economy isn’t boosting as rapidly as people think, although the second-largest economy of the world has bounced back after a COVID-19 induced lockdown, according to the CEO of research firm China Beige Book, Leland Miller.
Miller pointed out that China has truly seen recovery; however, there is no improvement on a year-on-year basis. He further told that the recovery isn’t evenly spread out across the country.
He told CNBC on Friday, “The recovery itself is actually two-pronged, and you see the larger cities, you see the coastal regions doing much, much better than the rest of the country”.
“So, there’s really two recoveries going on — Beijing wants to advertise the Beijing, Shanghai, Guangdong type of recovery, but that’s not most of China,” he told, adding that the rest of China is seeing a far more muted recovery.
Moreover, Miller said that businesses are not borrowing as much as they should that is a worrying sign.
“If you look at what’s happening in the credit markets too, a lot of these firms, services in particular, but also retail, others, are not borrowing as much as you would think that they would,” he told.
“That’s not what should happen. When you’re coming out of a coronavirus stoppage or slowdown, we should be seeing a lot more borrowing. Since we’re not, you got to question what firms are seeing that’s making them hesitate,” he added.
But the national day celebration in the previous week, dubbed the Golden week, as it has led to “room for cautious optimism,” according to Benjamin Cavender, managing director at China Market Research Group.
“If you look at the trip numbers – 600 million trips taken for this week this year, that’s still down compared to about 800 million last year. So the numbers on the face of things still look lower, but they’re coming back,” he told CNBC Friday.
“This suggests that the consumer sector, the final part of the recovery story, is revving up,” the firm said on Friday.