China's economic performance in the second quarter fell short of expectations, reflecting weaker consumer spending and a downturn in the property market, indicating that additional policy measures may be necessary to meet this year’s official growth target.
According to the National Bureau of Statistics, the country’s Gross Domestic Product (GDP) grew by 4.7 percent year-on-year in the second quarter. This was below economists' predictions of a 5.1 percent increase and less than the 5.3 percent growth achieved in the first quarter of the year.
On a quarterly basis, GDP saw a 0.7 percent rise, falling short of the 1.1 percent growth forecast and decreasing from the first quarter's growth of 1.6 percent.
Despite this deceleration, analysts at Capital Economics anticipate that economic growth will regain some momentum in the upcoming months. They cite property support measures, strong exports, and increased fiscal spending as factors likely to drive short-term growth acceleration.
However, these economists also caution that this growth is unlikely to be sustainable in the medium term.
Lynn Song, an economist at ING, commented that reaching a 5 percent growth rate remains challenging. She emphasized that additional fiscal and monetary support will be crucial in the latter half of the year to achieve the annual growth target.
June’s data revealed that industrial production grew by 5.3 percent year-on-year, surpassing forecasts for a 4.9 percent increase. However, this was a decrease from the 5.6 percent growth observed in May.
Retail sales increased by 2.0 percent in June, below expectations for a 3.3 percent rise and down from the 3.7 percent growth recorded in the previous month.
For the January to June period, fixed asset investment grew by 3.9 percent year-on-year, aligning with expectations but slightly down from a 4.0 percent increase in the first five months of the year.
Property investment plunged by 10.1 percent in the first half of the year, maintaining the same rate of decline as observed from January to May.
The urban unemployment rate remained steady at 5.0 percent in June, matching both May’s rate and market expectations. Meanwhile, the People's Bank of China injected liquidity into the banking system on Monday through medium-term lending facilities and reverse repos.
The central bank conducted a one-year Medium-Term Lending Facility (MLF) worth CNY 100 billion at an interest rate of 2.50 percent, unchanged from the previous operation. Additionally, it injected CNY 129 billion via seven-day reverse repo operations.
