A man carrying a kite in the shape of China’s national flag walks along the Huangpu River waterfront in Shanghai – across from the Pudong financial district of Lujiazui. A Chinese flag flies over Shanghai.
China released a series of disappointing data this Monday.
The Chinese economy grew 6.3 percent in the second quarter, falling short of forecasters’ expectations.
Retail sales were also down, suggesting the country’s recovery from the COVID crisis has stalled.
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China has released a new set of economic data – and they’re looking grim.
The country may add subpar growth and flat retail sales to a growing list of red flags. They suggest that the Hopes for post-COVID economic revival-Pandemic have failed.
Here are the most important data that National Statistics Office published on Monday:
China’s gross domestic product rose 6.3 percent in the three months ended June 30, up from 4.5 percent in the first quarter. That’s well below the 7.3 percent who economists polled by Reuters had expected. Retail sales growth slowed to 3.1 percent in June from 12.7 percent in the previous month. The consumer price index, which tracks inflation, rose just 0.7 percent year-on-year in the first six months of 2023. Youth unemployment skyrocketed: at the end of last month, 21 percent of 16-24 year olds were unemployed. Disappointing trade figures showed that exports – a key economic driver for China – fell 8.3 percent year on year in June, while imports fell 2.6 percent over the same period.
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Beijing finally lifted its tough COVID restrictions in late 2022, raising hopes of a speedy recovery for the world‘s second largest economy. However, the latest research suggests that is far from the case as the country’s post-pandemic economic restart has so far fallen far short of expectations.
“The hangover from the pandemic is weighing on China’s recovery,” said Harry Murphy Cruise, an economist at Moody’s Analytics, in a research note. “The year 2023 is becoming more and more a year to forget for China”
Investors also seemed to take Monday’s data as worrying as stock market indices CSI 300 and Shanghai Composite fell by just under one point each until the final gong. China’s ruling Politburo is due to meet later this month, and economists expect it to discuss a possible stimulus package to boost the country’s faltering growth.
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The People’s Bank of China already has that interest rates loweredto stimulate spending, but policymakers may be forced to consider more drastic measures to prevent the Year of the Rabbit from turning into a 12-month nightmare for the economy.
“Slacking GDP growth and weak June data should reinforce market sentiment that recovery momentum is slowing and more vigorous policy support is warranted,” Mark Haefele, UBS’s CIO of global wealth management, said in a note shared with Insider.
“We don’t expect to return ‚Bazooka-Stimulus‘Policy of previous crisis years, but we expect further action in the coming weeks,’ he added.
Read the original article in English here.