The latest data from China’s National Bureau of Statistics indicates a 4.7% increase in the country’s GDP for the second quarter compared to the preceding year, below the 5.1% anticipated rise as per a Reuters survey. Retail sales for June also showed a smaller uptick, rising by only 2% instead of the expected 3.3%.
Analyst Louise Loo from Oxford Economics pointed out a significant decline in discretionary retail expenditure post the lockdowns in Shanghai during April 2022. The firm now predicts an improved GDP growth rate of 4.8% for China in 2024, surpassing the previously forecasted 4.4% increase in December 2023.
In a positive turn of events, industrial output surpassed projections in June, marking a 5.3% year-on-year increase, exceeding the anticipated 5% growth. High-tech manufacturing saw a substantial uptick of 8.8% in value addition. Urban fixed asset investments for the first half of the year grew by 3.9%, in line with expectations, although infrastructural and manufacturing investments slowed down in June compared to May. Real estate investments continued their steady decline by 10.1%.
The Bureau stressed the importance of enhancing market vitality and domestic impetus to sustain a stable economic expansion. The urban joblessness rate remained unchanged at 5% in June, with youth unemployment standing at 14.2% in May.
Over the initial half of the year, the average per capita disposable income for urban dwellers reached 27,561 yuan ($3,801), showcasing a 4.6% nominal growth from the previous year. Rural disposable income surged at a quicker pace of 6.8%, but at 11,272 yuan, it stayed below half of the urban residents’ income.
Despite missing certain economic milestones, China’s exports exceeded projections by rising 8.6% in June compared to the previous year, while imports fell short by declining 2.3%. Retail sales for the first six months 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% increase.
However, cosmetic product sales experienced a significant dip of 14.6% in June, emerging as the worst-performing category. Conversely, revenue from catering services grew by 5.4% in June, contributing to a 7.9% increase during the initial half of the year.
Consumer prices in China saw a meager 0.2% year-on-year increase in June, falling below expectations, while core Consumer Price Index (CPI) advanced by 0.6%, marginally lower than the 0.7% rise during the first half of the year. Demand for credit remained feeble, with new yuan loans and broad money supply growth exhibiting a significant decline in the initial half of the current year compared to 2023.
Analysts at Goldman Sachs put forth that recent policy communications indicate the People’s Bank of China is emphasizing improving monetary policy transmission over overall credit expansion. They envisage a gradual deceleration in the growth of new yuan loans and M2.
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