China’s Economic Growth Underperforms in Second Quarter, Prompting Policy Discussion

China’s Economic Growth Falls Short of Expectations in Second Quarter

China’s economic growth in the second quarter of the year has underperformed against market expectations, with weak consumption and property data serving as a wake-up call for policymakers. The National Bureau of Statistics (NBS) reported that the world’s second-largest economy grew by 4.7% in the second quarter compared to a year earlier.

In the first half of the year, China’s gross domestic product grew by 5%, according to the NBS. Quarter on quarter, the economy grew by 0.7% in the second three months of the year, down from a rise of 1.6% from the previous three months.

“The current external environment is complicated, while domestic demand remains insufficient. We still need to consolidate the foundation for economic recovery,” the NBS stated.

China’s industrial output increased by 5.3% last month from a year earlier, compared to 5.6% growth in May. Overall fixed-asset investment rose by 3.9% in the first six months of 2024, year on year, with private investment growing by 0.1% in the first half of the year.

Property investment fell by 10.1% in June, year on year, while the overall urban unemployment rate remained at 5% in June. Despite challenges in the domestic property and job markets, Beijing has set an annual economic growth target of around 5%, with many predicting it will be achieved.

Gary Ng, a senior economist at Natixis Corporate and Investment Bank, commented on the situation, stating, “China’s economy shows a broad deceleration as weak consumer and business sentiment deepen the woes. If there is no shift towards demand-side policies, China may not reach its 5% annual growth target. The poor economic data may eventually offer an excuse for changing the course.”