Weak housing market and export gloom put brakes on China growth
China’s economy expanded by 6.3% in the second quarter of 2023 compared with the same period a year ago, falling short of market expectations as export demand remained tepid and sinking property prices sapped consumer confidence.
China’s GDP in the April-June period was up by 6.3% , the national bureau of statistics reported . The year-on-year increase was 4.5% in the first quarter.
Economists had forecast growth to accelerate to 7.3%, according to a Reuters survey.
China’s growth has underpinned the global economy for three decades, providing a generation of new demand.
Given last year’s Covid lockdowns, 2023 was expected to see the country post a rapid rebound. The trade sector recorded particularly weak figures .
In June alone, it fell about 6%, with exports slumping by 8.3% to just shy of 2tn yuan ( £21 3bn) and imports down by 2.6%. Also for June alone, China’s retail sales grew by 3.1% , far below May’s 12.7% increase. Analysts had expected growth of 3.2%.
Louis Kuijs, S&P Global’s chief Asia economist , said the consumption numbers were disappointing . “We had double-digit retail sales growth in April and May from a very low base, and that has petered out to only 3.1% nominal retail sales growth, indicating consumers remain quite reluctant,” he told Reuters.
The moderate growth numbers are likely to raise expectations of further eff orts by the Chinese government to stimulate the economy and ensure a 5% growth target is reached for 2023.
Yesterday’s preliminary numbers show the economy grew by 5.5% for the first six months.
China’s central bank has already lowered borrowing rates several times to try to shore up demand . Inflation has largely evaporated in China, in contrast to many other parts of the world.
While the urban unemployment rate in China remained unchanged for June at 5.2%, the proportion of those out of work aged between 16 and 24 rose to a record 21.3% , the sixth consecutive monthly increase.
Other official data released yesterday showed the value of newly constructed residential buildings continued to decline in almost all of the 70 largest cities in China.
Those in Shenzhen, near Hong Kong in the south, were down more than 5% over the January-June period compared with a year earlier.
Source: The Guardian