Economics: China - Back To Normal?

 (Drivebycuriosity) - It looks like that China`s economy is back to normal. Yesterday we learned that "the Caixin China General Services PMI jumped to 55.0 in May 2020 from 44.4 in the previous month, pointing to the first month of growth in the service sector since January and the fastest since October 2010, as the economy recovers from strict coronavirus-led containment measures" (charts below). New orders rose the most since September 2010, boosted by stronger domestic demand. This barometer shows the current development in the service sector, which accounts for more than half of the Chinese economy and is therefore more important than manufacturing (like in the US)

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China`s industrial production also recovered, according to the China Caixin Manufacturing PMI (charts below).

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As a result the China Composite PMI, which combines both indices and respresents the whole economy also jumped back to normal ( charts below)

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China´s fast recovery from the corona crisis is no surprise. Beijing responded early, fast and consequently to the pandemic. Apparently the population has enough discipline for hand washing, mask-wearing & social distancing. As a result China´s numbers of new infections, active cases and deaths fell to almost zero (worldometers )

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The success allows the reopening of China`s economy and the return to normality. China`s economy might even get stronger when the corona crisis has past. History shows that consumer and businesses are more willing to change behavior during setbacks (twitter). Innovations typically gain traction during tumultuous times: they get cheaper, faster, more convenient, more productive, more creative.  Companies are streamlining operations and are getting more efficient & productive as they always do when they are challenged.

People, who were forced to stay at home for a while, will use the internet for work, shopping and entertainment more often & intense. This way the virus will boost the digitization process which already has been driving China`s transformation process on her way to become a modern economy where most of the national GDP is created by the service sector (like the USA, UK, Germany and other Western countries). The digitization will drive productivity growth across all industries, leading to more economic growth (driveby).