This article originally ran on Reuters on July 14, 2022.

Full or partial lockdowns were imposed in major centres across the country in March and April, including the commercial capital Shanghai, which saw a year-on-year contraction of 13.7% in GDP in the second quarter. Output in the capital Beijing shrank 2.9% year-on-year in the same quarter.

Many of those curbs have since been lifted, and June data offered signs of improvement.

For the first half of the year, GDP grew 2.5% from a year earlier.

Data on June activity, also released Friday, showed that China’s industrial output grew 3.9% in June from a year earlier, quickening from a 0.7% rise in May.

Fixed asset-investment, a driver Beijing is counting to shore up growth, grew by a better than-expected 6.1% in the first six months of the year from a year earlier, compared with a 6.2% jump in January-May.

Retail sales also improved, up 3.1% year-on-year in June and marked the quickest growth in 4 months, after authorities lifted a two-month lockdown in Shanghai. Analysts had expected flat growth after May’s 6.7% drop.

“Retail growth indicates that lockdowns have been the primary drag on consumption,” said Jacob Cooke, CEO of WPIC Marketing + Technologies, in Beijing.

“Consumers are still harbouring some uncertainty about lockdowns, but with indications that future lockdowns won’t be as strict, we’re optimistic that consumption will continue to recover in H2.”

 

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