China's Economic Recovery is Already Hitting Roadblocks

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The Chinese economy is reopening and discovering a massive decrease in demand for their products.

In May, China's economic reopening was blunted by decreased demand, according to the Wall Street Journal.

Most Chinese factories have officially reopened and the factory activity has been confirmed in official records, but the demand is not there. China's official purchasing managers index revealed a continued expansion, but growth decreased for the second month in a row.

The National Bureau of Statistics reported that production had decreased to 53.2 from 53.7 in April, while exports were low. Furthermore, small private manufacturers export orders decreased significantly more. These factors have contributed to a stall in China's economic recovery from the pandemic.

“I’m afraid the fastest pace of recovery is already behind us,” said Yang Weixiao, a Beijing-based economist at Kaiyuan Securities. “Weak demand is indeed the biggest problem.” China has abandoned its annual growth target for the year, but hasn't ruled out overall growth just yet. The communist party wants to eradicate poverty and create 9 million jobs this year.

The decrease in demand is putting pressure on these goals. In response, the government is rolling out stimulus to help the economy.

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