State-funded infrastructure projects have underpinned the recovery in the Chinese manufacturing sector after being hit by the coronavirus pandemic in the first quarter. The projects increase the production of cement, steel, and non-ferrous metals. As a result, the prices of steel and copper have surged. Railway investments also jumped 11% in the second quarter after slumping 21% in the previous quarter.
Robust infrastructure demand also boosted the Baltic dry index by 257% in June after plunging in May due to the freeze in global trade amid coronavirus-related lockdowns. The Baltic dry index reflects rates for Capesize and tracks rates for vessels carrying dry bulk commodities.
Demand for electronics and automobiles also improved in the second quarter, with factories restarting their production after a hiatus amid the lockdown. The property sector also showed signs of rebounding, with real estate sales and investment increasing.
The recovery in the manufacturing sector is expected to have helped China to post positive growth in the second quarter. However, analysts warned that manufacturers might struggle to maintain the momentum without more robust broad-based demand and exports. They forecast that exports would be under pressure in the third quarter as global consumption stays weak while demand for medical supplies slows.
