China's Industry Didn't Take Long To Rise, How About The United States?

Illustration. (Photo: Unsplash)

JAKARTA - Even though it is still in a situation of the COVID-19 pandemic, signals of China's economic revival are starting to be felt. After rejecting the recession because the economy grew 3.2 percent in the second quarter of 2020, now the industry in the Bamboo Curtain country is slowly starting to rise.

Quoted from Reuters, Tuesday, July 28, Chinese industrial companies posted a profit of 11.5 percent year on year (yoy) to 666.55 billion yuan or the equivalent of 95.27 billion US dollars. This makes growth the fastest since March 2019.

From these statistics, May 2020 saw the sector's first monthly growth in terms of income since November last year or before the outbreak of COVID-19.

After a record decline earlier this year, China's economy managed to bounce back more than expected in the second quarter of 2020. This was due to the end of the lockdown period, and policies to increase stimulus.

Still, analysts cautioned that China's rebound was heavily dependent on investment led by the country's government. This is because domestic and global demand remains weak.

Statistics bureau official Zhu Hong said the steel, oil and gas, oil refining and non-ferrous metals industries saw a significant increase in profits in June with reduced production costs and demand.

But he warned about the prospects going forward as market demand remains weak amid the impact of the COVID-19 pandemic. The international trade situation is also still in complex problems, so that uncertainty remains about the sustainability of profits.

Major manufacturers of pharmaceutical raw materials and medical equipment, including Zhejiang Nhu and Zhejiang Yueyue, said they expect stronger profits for the first six months.

Gauges ranging from factory surveys to producer prices all reflect signs of further upside in manufacturing. But analysts said the factory could have a difficult time maintaining momentum as rising demand, struggling exports and massive floods disrupted construction and other economic activity in the Yangtze Delta.

Meanwhile, the United States has experienced the opposite fate, where more than 40 million people have officially been unemployed since last March. The spike in the transmission of COVID-19 in Uncle Sam's country has had a direct impact on economic shocks.

Quoted from CNBC, the US government is reportedly preparing to pass a number of regulations to stimulate the domestic economy. However, it seems that the level of economic losses in the US has been too severe, so that the country is again haunted by a second wave of layoffs.

In fact, The Goldman Sachs Group predicts the US economy will experience a deeper contraction than previously estimated, from 4.2 percent to 4.6 percent.

This prediction is based on a financial stimulus which is considered to be of short-term economic improvement. This is because the value of the government's capital injection is considered too small in dealing with the impact of the economic crisis and labor problems.