Chinese-made cars wait to be loaded onto a ship for export at Yantai Port on July 12, 2024, in China's Shandong province.
VCG | Visual China Group | Getty Images
BEIJING – China's gross domestic product in the second quarter rose 4.7% from a year earlier, the National Bureau of Statistics said on Monday, below expectations for 5.1% growth, according to a Reuters poll.
Retail sales in June also came in below expectations, rising 2% compared to expectations of 3.3% growth.
“We estimate that discretionary retail spending fell at the fastest successive pace since the Shanghai lockdowns in April 2022,” Louise Lu, chief economist at Oxford Economics, said in a note.
The company now expects China's GDP to grow by 4.8% in 2024, up from the 4.4% it forecast in December 2023 for next year.
However, industrial output growth in June beat expectations at 5.3%, compared with a Reuters estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in June.
Urban fixed-asset investment rose 3.9 percent in the first six months of the year, in line with expectations. Investment in infrastructure and manufacturing slowed year-on-year in June from May, while real estate investment fell at the same rate of 10.1 percent.
China’s housing-related wealth is set to rise 2.2% in 2023, Oxford Economics said in late May, a sharp decline from the average annual growth of 13% between 2016 and 2021.
“We need to do more to stimulate the market and stimulate internal momentum,” the authority said in an English-language press release.
The statement also called for efforts to “strengthen and enhance the momentum needed for economic recovery and growth, in order to ensure sustainable and sound development of the economy.”
The unemployment rate in urban areas in June was unchanged from the previous month at 5%, the office said. The unemployment rate for people aged 16 to 24 who are not in school usually appears a few days after the overall figure. The latest available data showed the youth unemployment rate remained high at 14.2% in May.
The data showed that the average per capita disposable income of city residents reached 27,561 yuan ($3,801) in the first half of the year, a nominal growth of 4.6 percent compared with last year.
Rural disposable income grew at a faster rate, rising 6.8 percent in nominal terms, but at 11,272 yuan, it was less than half that of urban residents.
No press conference
The National Bureau of Statistics did not hold a press conference to release the data. Separately, China's third high-level policy meeting will kick off on Monday.
Bruce Pang, chief economist and head of research for Greater China at JLL, said he was looking forward to how the general meeting could boost confidence and stabilize expectations.
He said China would need more work to reach its target of growth of around 5%, because the economy expanded by only 5% in the first half, and growth in the second half is likely to be slower.
China's GDP grew 5.3% year-on-year in real terms in the first quarter.
According to data accessed via Wind Information, nominal GDP growth was 3.97% in the first quarter, and 4.01% in the first half of the year.
China's exports as a growth engine have held up better than expected, but there are uncertainties about the outlook due to trade tensions, said Xu Hongcai, deputy director of the Economic Policy Committee of the China Society for Political Science.
He said China may increase its financial support and ease monetary policy in the second half of the year.
China’s exports rose 8.6% year-on-year in June, customs data showed on Friday, beating expectations. But imports fell 2.3% year-on-year in June, missing expectations for a slight increase.
Cosmetics sales down
Retail sales rose 3.7% in the first six months of the year, with online sales of physical goods up 8.8%. Services sector sales rose 7.5%.
Sales of communications equipment, sporting goods and other recreational goods, as well as alcohol and tobacco, rose more than 10%. Sales of grains, oil and food jumped 9.6%.
In June, sales in the sports category fell 1.5% compared to last year, while sales of alcohol, tobacco and communications equipment increased.
Sales of beauty products fell 14.6% year-on-year in June, the worst-performing category.
Restaurant sales rose 5.4% in June compared to a year ago, and grew 7.9% in the first half of the year.
Other measures also pointed to weak domestic demand.
China’s consumer prices rose 0.2% in June from a year earlier, missing expectations. The core CPI, which strips out more volatile food and energy prices, rose 0.6% year-on-year in June, slightly slower than the 0.7% increase in the first six months of the year.
weak demand for credit
Chinese credit data released on Friday showed a sharp decline in growth in broad money supply and new yuan loans in the first half of the year compared to the same period in 2023.
Household loans rose by 1.46 trillion yuan ($200 billion) in the first six months of the year, nearly half the 2.8 trillion yuan of new loans to this category last year, according to the People's Bank of China.
Loans to businesses rose by 11 trillion yuan in the first half of the year, slightly lower than the 12.81 trillion yuan recorded in the same period last year.
“June money and credit data indicated that credit demand remained weak. Recent policy statements suggest that the People’s Bank of China continues to focus on strengthening monetary policy transmission and downplaying the importance of overall credit growth. Looking ahead, growth in new RMB loans and M2 money supply may gradually slow,” Goldman Sachs analysts said in a report on Friday.
