Having shut its economy in the first quarter to arrest the virus spread and managed so far to largely defeat subsequent outbreaks, China is claiming global leadership in dealing with the deadly disease. Yet a conservative stimulus approach has produced only a modest domestic recovery, and one that remains highly vulnerable to setbacks in external demand as shutdowns continue to hamper global activity.

Further details from Thursday’s data release:

• Industrial output rose 4.8% from a year earlier, matching the median estimate
• Retail sales shrank 1.8%, weaker than a projected 0.5% increase
• Fixed-asset investment shrank 3.1% in the first half of the year, versus a forecast drop of 3.3%
• The surveyed urban jobless rate fell to 5.7%

“The recovery in 2Q is strong, but also highly uneven” as the supply recovery is stronger than demand, and investment is stronger than consumption, according to Larry Hu, chief China economist at Macquarie Bank Ltd. “Looking ahead, while the growth momentum would slow inevitably, GDP growth could rebound to around 5% on year in the second half” of 2020, he said.

Today’s data showed the recovery is still largely industry-driven, while consumer sentiment is weaker than expected. A raft of measures have been rolled out since the pandemic to shore up the economy, including tax and fee cuts, cheaper loans, and increased fiscal spending. Stimulus has still fallen far short of the policies offered in developed economies, out of concern for debt buildup and financial stability.

“China’s economy has gradually overcome the negative impact brought by the virus in the first half, showing recovery momentum,” Liu Aihua, NBS spokesperson, said in Beijing after the data was released. “The recovery of the domestic economic recovery still faces pressure amid rising external challenges, as the coronavirus continues to impact the global economy,”

A major headwind to the recovery is the level of unemployment created by the collapse in manufacturing in the first quarter. The surveyed unemployment rate doesn’t capture the full impact, and tens of millions may still be out of work due to the pandemic.

Policy makers are also signaling that monetary and fiscal policy won’t become much more supportive, as long as credit growth continues its upward trend.

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“Not out of the woods” is how Helen Qiao, Bank of America Merrill Lynch’s chief economist for Greater China, described today’s numbers. She told Bloomberg Television that retail sales are clearly lagging the recovery in other parts of the economy.

“People still hold a fear against going out and traveling,” and the service sector is continuing to feel pain, she said.