2020 GDP rankings of 31 provinces in China announced: Beijing, Shanghai and Guangzhou will face economic challenges

As of July 28, 31 provinces, cities and districts across the country announced their regional GDP for the first half of 2020. Leading provinces such as Guangdong, Jiangsu and Shandong still ranked at the top in terms of GDP. In terms of GDP growth rate, 16 provinces, cities and districts had positive GDP growth in the first half of the year, while 9 provinces, cities and districts had GDP growth rates lower than the national average.

Experts believe that looking back on the first half of the year, driven by a number of favorable factors, economic development in the central and western regions has performed well, and the leading provinces in economic development have demonstrated their strength under the impact of the epidemic, but regions concentrated in the tertiary industry still face challenges in economic recovery. Looking ahead to the second half of the year, China's local economic development will continue to recover, with the central and western regions continuing to recover at an accelerated pace, development in the eastern region expected to return to the right track, and local agglomeration economies may further develop.

The Midwest region performed well

Securities Times statistics show that as of July 28, there were 16 provinces, cities and districts with positive GDP growth in the first half of the year, namely Tibet, Xinjiang, Gansu, Guizhou, Ningxia, Hunan, etc.

"The vast majority of provinces with positive GDP growth are in the central and western regions, especially the western region." Tao Jinxiang, senior researcher at Suning Financial Research Institute, said that an important reason is that these regions were relatively less affected by the epidemic and resumed work and production earlier, especially the industrial sector and fixed asset investment such as infrastructure recovered faster. Among them, Tibet and Xinjiang were less directly affected by the epidemic, and economic growth basically maintained normal levels.

Wu Chaoming, deputy director of the Caixin Research Institute, said that the GDP growth rate of most central and western regions has achieved positive growth. On the one hand, it is related to the large room for investment in the central and western regions to make up for shortcomings and the country's increased efforts to develop the western region. For example, in the first half of the year, the growth rates of fixed asset investment in Xinjiang and Tibet were 28.6% and 18.5% respectively, achieving double-digit growth despite the impact of the epidemic, and were the main driving force for their positive economic growth. On the other hand, since March, the overseas epidemic has continued to spread and worsen, and the central and western regions with lower dependence on foreign trade have been less affected than the eastern coastal regions.
In addition, agglomeration economy has also shown effectiveness despite the impact of the epidemic. Tao Jin said that in the Yangtze River Delta region, the economic growth rates of Jiangsu, Anhui and Zhejiang have all turned positive. Relying on the previous integrated development foundation, these three regions have also resumed work and production at a relatively high efficiency. At the same time, they have also played their respective industrial characteristics and made efforts in industrial manufacturing, Internet economy and other fields, alleviating the impact of social isolation measures on their service industries.

Leading provinces show their strengths

In the first half of the year, Guangdong, Jiangsu, Shandong, Zhejiang, Henan and Sichuan still ranked among the top six in local GDP. While Hubei Province, which ranked seventh in GDP in the same period last year, is at the center of the outbreak this year, it has been surpassed by Fujian, Hunan and Anhui.

"These leading provinces have large GDP scale and solid foundation, and the slight decrease in growth this year will not affect their ranking." Wu Chaoming said that in the medium and long term, the GDP of these provinces will be at the forefront for a long time. In addition to the combined influence of various factors such as capital and technology, there is also strong support from population factors. For example, the permanent population of Guangdong, Shandong, Henan, Sichuan and Jiangsu provinces has long ranked among the top five in the country, which is an important source of power for the above provinces' GDP to continue to lead the country. Although Zhejiang Province ranks tenth in the country in terms of permanent population, its GDP has long been ranked among the top five in the country. On the one hand, this is due to the strong development momentum of its tertiary industry. For example, the GDP growth rate of the tertiary industry in Zhejiang Province has long been higher than the national average. On the other hand, Zhejiang's private economy is active and enterprises have high production and operation efficiency. As of now, among the nearly 4,000 A-share listed companies, 475 are registered in Zhejiang, ranking second among all provinces in the country.

Since the beginning of this year, Hubei Province has made huge sacrifices for the people of the whole country in order to fight against the epidemic. The long-term epidemic blockade caused its GDP in the first quarter to drop by 39.2% year-on-year, which was significantly higher than that of Fujian, Hunan and Anhui in the same period, and formed a significant drag on its GDP in the first half of the year.

Fortunately, according to the summary of the Hubei Provincial Bureau of Statistics, the economic and social development of Hubei province rebounded strongly in the second quarter, the decline in economic indicators continued to narrow, some indicators began to turn positive on a monthly basis, the overall recovery trend of economic operation continued to improve, and positive factors continued to accumulate. As of the end of June, the resumption rate of the province's "four major" enterprises reached 98.8%, and the resumption rate of small and medium-sized enterprises reached 86.9%, both catching up with the national average. There were 1,598 new projects started, an increase of 826 from the previous month.

The economies of Beijing, Shanghai and Guangzhou face challenges

In the first half of the year, the GDP growth rates of nine of the 31 provinces, cities and districts were lower than the national GDP growth rate of -1.6%, namely Hubei, Heilongjiang, Liaoning, Tianjin, Inner Mongolia, Beijing, Shanghai, Hainan and Guangdong. Among them, the GDP growth rates of Beijing, Shanghai and Guangdong Province, which have attracted much attention, were only -3.2%, -2.6% and -2.5% respectively in the first half of the year.

Tao Jin said that big cities such as Beijing, Shanghai, Guangzhou and Shenzhen are home to a large number of tertiary industries, and the impact of the epidemic they have suffered is more profound than that of the secondary industry. Correspondingly, due to the concentration of the tertiary industry, the economy of large cities is more dependent on consumption. The recovery of consumption after the epidemic cannot directly benefit from various countercyclical policies like the industrial sector, lacks policy leverage, and is therefore slower. Due to the above two factors, the economic growth and recovery of these three provinces and cities dominated by urban economy faced temporary challenges in the first half of the year.

"The epidemic has made it more difficult for migrant workers to return to work, and the labor force in Beijing, Shanghai and Guangzhou is mainly composed of migrant workers." Wu Chaoming told the Securities Times. In addition, Beijing, Shanghai and Guangzhou are important transportation hubs in the country and even the world, and the epidemic prevention and control measures are more stringent, and industries with large population gatherings are greatly affected. For example, in the first half of the year, the total retail sales of consumer goods in Beijing, Shanghai and Guangdong decreased by 16.3%, 11.2% and 14% year-on-year respectively, which had a significant drag on GDP.
Second half of the year

Or pay more attention to agglomeration economy

Many experts unanimously believe that as the epidemic is gradually brought under overall control, the resumption of work, production, business and market is being steadily advanced, and the effects of various support policies are gradually emerging. It is expected that China's local economic development will continue to recover in the second half of the year and gradually return to normal growth. In the second half of the year, the structural characteristics of domestic economic recovery will remain obvious, showing a pattern of infrastructure leading, real estate following, structural optimization, and investment driving economic recovery. In addition, with the joint support of fiscal and monetary policies, consumption and manufacturing investment are expected to slowly recover.

In Wu Chaoming's view, the central and western provinces have both the advantage of a labor dividend and the support of a huge consumer market. With the help of policies such as the development of the western region and accelerated infrastructure construction to make up for shortcomings, the economy is expected to continue to recover at an accelerated pace. The eastern region has a well-developed industrial structure and a high-quality enterprise base. As it shakes off the impact of the epidemic and the country increases policy support for private and foreign trade enterprises, the effect of the strong getting stronger will become more prominent, and the economy may accelerate its return to the right track.

"The regional differentiation in economic growth rates caused by the epidemic is likely to continue or even be further intensified due to the further development of agglomeration economy." Tao Jin predicts that the construction of urban agglomerations will be further emphasized. This is in line with the actual situation of China's current regional development and conforms to the mainstream global urban and regional development laws, namely, giving full play to the radiation and attraction capabilities of core cities, and giving full play to the effects of factor agglomeration, economies of scale and knowledge spillovers in key regions, which not only improves the efficiency of regional economic development, but also creates a larger market, and more resources may also be concentrated in these regions. The trading volume in the two markets continued to shrink during the period of consolidation. More stocks rose than fell, and there were less than 40 stocks that hit the daily limit. As of closing, the Shanghai Composite Index rose 0.71%, the Shenzhen Component Index rose 1.31%, and the ChiNext Index rose 1.32%.

Industry insiders believe that northbound funds have continued to flow out recently due to disturbances in the foreign market, especially with large-scale cashing out in the past two weeks, which will put certain pressure on the market in the short term. However, in the medium term, the logic of domestic economic recovery remains unchanged, and there is a large space for monetary policy. The value of A-shares is still high in the context of global asset allocation.

The market is volatile in the short term, where will it go in the future? Most brokerages believe that although market sentiment may continue to cool in the short term, the market's correction space is not expected to be large.

Chen Guo of Essence Securities said that the market may still face a period of consolidation in the short term, and a new round of rising prices still needs to wait for a turnaround. From a medium-term perspective, the three core factors of global liquidity overflow, China's economic recovery trend and the attractiveness of A-share allocation have not been destroyed, and our medium-term bullish attitude towards the A-share market remains unchanged.