China’s economy lost momentum in the second quarter, with gross domestic product expanding 0.8 per cent against the previous three months as falling exports, weak retail sales and a moribund property sector weighed on growth.
The difficulties facing the world’s second-largest economy will put further pressure on global growth and add to calls for Beijing to step up stimulus measures more than six months after it abandoned tough Covid-19 controls.
The second-quarter growth rate was stronger than the 0.5 per cent forecast in a Reuters analysts’ poll but weaker than the 2.2 per cent quarter-on-quarter expansion in the January-March period.
Year on year, the economy grew 6.3 per cent in the second quarter because of a low-base effect from last year, when large cities including Shanghai were locked down for an extended period. The Reuters poll had forecast 7.3 per cent growth.
The National Bureau of Statistics said “generally speaking”, economic development had “fully returned to normal” in the first half of the year.
“However, we must be aware that the international political and economic circumstance is quite complicated, and the foundation for sustained recovery at home is not solid yet,” said NBS spokesperson Fu Linghui.
China’s economy initially rebounded more strongly from the protracted Covid lockdowns last year but in recent months has begun to lose steam on weak household and business confidence.
The situation has been complicated by a slowdown in trade as high interest rates in the west weigh on consumer purchases of Chinese-made goods.
The NBS said exports in June fell 8.3 per cent compared with a year earlier. Retail sales were lacklustre, up 3.1 per cent in June compared with the same period the previous year and down from 12.7 per cent growth in May.
Real estate investment was down 7.9 per cent in the first half of the year compared with the same period a year earlier, the NBS said, with commercial property sales by floor space down 5.3 per cent.
Private investment fell 0.2 per cent in the first half while capital expenditure cooled across the board.
Infrastructure investment, used by the government to stimulate the economy, grew 7.2 per cent in the first half of the year compared with a year earlier.
Unemployment for those aged 16 to 24 hit a new high of 21.3 per cent in the second quarter, while overall urban unemployment was stable at 5.2 per cent in June.
On the positive side, catering sales were up 21.4 per cent in the first half as consumers returned to restaurants. Industrial output in the renewables sector also rose, with electric vehicles sales up 35 per cent year on year in the first half.
Economists say the focus will now switch to a meeting of China’s ruling politburo this month, which is expected to consider further possible support measures for the economy.
Shares sold off in China following the data release, with a morning drop in the CSI 300 index of Shanghai- and Shenzhen-listed stocks steepening to 1 per cent.