The most recent figures from China’s National Bureau of Statistics reveal a 4.7% uptick in the nation’s GDP for the second quarter compared to the previous year, which is lower than the 5.1% expected increase according to a Reuters poll. Retail sales in June also displayed a modest rise of 2%, falling short of the anticipated 3.3%.
Analyst Louise Loo from Oxford Economics highlighted a notable decrease in discretionary retail spending following the lockdowns in Shanghai in April 2022. The forecast now suggests an enhanced GDP growth of 4.8% for China in 2024, surpassing the earlier predicted 4.4% incline in December 2023.
In a positive development, industrial production exceeded projections in June, showing a 5.3% year-on-year growth, surpassing the expected 5% expansion. High-tech manufacturing recorded a significant increase of 8.8% in value addition. Urban fixed asset investments in the first six months of the year increased by 3.9%, as anticipated, though infrastructure and manufacturing investments slowed down in June compared to May. Real estate investments continued their steady decline, dropping by 10.1%.
The Bureau emphasized the importance of boosting market dynamism and internal momentum to sustain a steady economic growth trajectory. The urban unemployment rate remained steady at 5% in June, with youth unemployment recorded at 14.2% in May.
During the first half of the year, the average per capita disposable income for urban residents reached 27,561 yuan ($3,801), registering a 4.6% nominal rise from the previous year. Rural disposable income witnessed a quicker surge at 6.8%, but at 11,272 yuan, it remained below half of the urban residents’ income.
Despite missing some economic targets, China’s exports surpassed expectations by climbing 8.6% in June compared to the previous year, while imports fell short with a 2.3% decline. Retail sales in the first half of the year expanded by 3.7%, with online tangible goods sales rising by 8.8% and the service sector sales showing a 7.5% uptick.
Nevertheless, cosmetic product sales saw a considerable drop of 14.6% in June, emerging as the weakest performer. In contrast, catering service revenues increased by 5.4% in June, contributing to a 7.9% growth during the initial half of the year.
Consumer prices in China saw a modest 0.2% year-on-year rise in June, which was below expectations. The core Consumer Price Index (CPI) advanced by 0.6%, slightly lower than the 0.7% increase in the first half of the year. Demand for credit remained weak, with new yuan loans and broad money supply growth witnessing a significant decline in the first half of the current year compared to 2023.
Analysts from Goldman Sachs suggest that recent policy communications indicate the People’s Bank of China is focusing on improving monetary policy transmission rather than overall credit expansion. They anticipate a gradual slowdown in the growth of new yuan loans and M2.
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