According to the National Bureau of Statistics, China's GDP grew by 4,7% in the second quarter compared to the same period a year earlier. That fell short of the 5,1 percent estimate in a Bloomberg survey of economists. Growth in the first half of the year was 5%, which is in line with Beijing's annual target.
Other key data indicators:
- industrial production rose 5,3% in June from a year earlier, while economists had forecast a 5% rise;
- retail sales rose 2%, below forecasts of 3,4% growth;
- fixed investment rose 3,9% in the first six months, matching expectations for a 3,9% increase. The downturn in the real estate sector continued, with investment down 10,1% over the period;
- the unemployment rate in cities last month did not change compared to May and amounted to 5%.
The slowdown in growth reflected in the data could intensify calls for Beijing to step up efforts to boost growth. The data was released on the same day that President Xi Jinping was set to convene a third plenary session to set the main economic and political directions for the coming years.
The NBC statement said that China needs to "fully appreciate the difficulties, challenges and uncertainties of development", building confidence in the economy for the future, and make the right macroeconomic policies to promote healthy growth.
Retail sales reportedly grew at their slowest pace since 2022, signaling a reluctance among consumers to spend despite a government program to subsidize and encourage the replacement of older cars and appliances.
Chinese stocks in Hong Kong continued to slide after disappointing data, with the Hang Seng China Enterprises Index down 1,2%.
The disappointing data is likely to draw more attention to the third plenary session, where Xi Jinping and other top officials will discuss the long-term vision for the world's second-largest economy.
China's efforts to restart economic growth have so far focused on the supply side, even as domestic demand remains persistently weak as a multi-year slump in the housing market continues to undermine confidence and hold back consumption.
The crisis in the real estate sector is expected to remain the most serious obstacle to the economy in the coming months, if not the coming years. Exports, a key engine of growth this year, also face uncertainty as Beijing's trading partners introduce new barriers to Chinese goods.
Bloomberg notes that the People's Bank of China's ability to cut rates is limited by concerns about capital outflows, pressure on bank profits and the need to defend the yuan. This year's government spending is again behind budget as Beijing seeks to reduce local debt risks and officials scramble to find qualified projects for investment.
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