China’s GDP grew by 7.9% in the second quarter; retail sales exceeded expectations: economics
BEIJING-China announced a slightly lower-than-expected second-quarter GDP growth, while retail sales and industrial production grew faster than expected in June.
The National Bureau of Statistics said on Thursday that the country’s gross domestic product in the second quarter increased by 7.9% year-on-year. This is lower than Reuters’ estimate of 8.1% growth from April to June.
Zhu Chaoping, a global market strategist at JP Morgan Chase Asset Management, said in a report: “In general, the Chinese economy seems to be on the path of recovery, and the 6% annual growth rate target has been achieved.
“However, the downward trend in domestic demand and structural risks are worrying,” he said, noting that long-term credit growth is weak and market supervision is uncertain.
The GDP in the second quarter increased by 1.3% from the first quarter, which was higher than the 0.6% growth rate from the first quarter of this year to the fourth quarter of 2020. However, the latest quarterly growth rate is still lower than the 2.6% growth rate in the fourth quarter.
GDP grew by 18.3% in the first quarter, higher than the contraction a year ago.
“China’s economy continues to recover steadily,” the Bureau of Statistics said in a press release. But the bureau added that people still worry about the global spread of the pandemic and the domestic “unbalanced” recovery.
Retail sales in June increased by 12.1% year-on-year, higher than the 11% expected by Reuters. The fastest-growing category is beverages, with a year-on-year growth of 29.1%.
Retail sales growth lags behind the overall economy and is lower than analysts’ expectations for the first two months of the second quarter.
According to Pinpoint Asset Management’s analysis of public data, consumption in the four capital cities of Wuhan, Guiyang, Shijiazhuang and Yinchuan declined year-on-year in May.
Industrial production increased by 8.3%, higher than the 7.8% estimated by Reuters.
In the past three months, Chinese authorities have also announced support for companies affected by soaring commodity prices.
The urban surveyed unemployment rate stabilized at 5% in June, while the unemployment rate among the 16-24 year olds climbed to 15.4%, the same as in June 2020.
On Thursday, the reduction in the reserve requirement ratio (RRR) or the amount of reserves that banks must hold will take effect. Last week, the authorities’ initial hints of such interest rate cuts surprised investors and expressed concerns about slowing growth.
The interest rate cut is expected to release approximately RMB 1 trillion (or USD 154 billion) for the economy.
At the same time, the Chinese customs agency said earlier this week that export growth in June exceeded expectations by 32.2%.
Bruce Pang, head of macro and strategic research at China Renaissance Capital, said that export growth may slow in the second half of the year. He cited factors such as high growth in the second half of last year and weak growth in commodity prices.
China’s economic recovery is slowing down “still full of uncertainty and uneven growth. Employment, household income, consumption, manufacturing investment, service industries and private enterprises have not yet returned to pre-pandemic levels,” Pang said.