While China’s exports rose more than expected in June, imports rose much less than expected. Workers pictured here disinfect a container ship terminal in Qingdao on July 13, 2022.
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BEIJING – China posted second-quarter GDP growth of 0.4% from a year earlier, missing expectations as the economy struggles to shake off the effects of Covid-19 containment.
Analysts polled by Reuters had forecast a 1% increase in the second quarter.
Industrial production in June also missed expectations, rising 3.9% from a year ago, versus 4.1% forecast.
However, retail sales rose 3.1% in June, recovering from an earlier slump and beating expectations for no growth from a year earlier. Major e-commerce companies held a promotional shopping festival in the middle of last month.
Retail sales in June were boosted by spending in many categories, including auto, cosmetics and medicine. But catering, furniture and construction materials fell. Among retail sales, online sales of physical goods rose 8.3% from a year ago in June, slower than the previous month’s 14% increase.
Fixed asset investment for the first half of the year came in above expectations, 6.1% vs. 6% forecast.
Overall fixed asset investment increased on a monthly basis, rising 0.95% from May to June in an undisclosed figure. While investment in infrastructure and manufacturing maintained a similar or better pace of growth from May to June, real estate conditions worsened. Investment in real estate fell 5.4% in the first half of the year from a year earlier, worse than the 4% decline in the first five months of the year.
Unemployment across China’s 31 largest cities fell to 5.8% from a pre-pandemic high in June, but rose further to 19.3% for 16 to 24-year-olds.
The Bureau of Statistics described the latest economic results as “hard-earned gains” but warned of the “prolonged” impact of Covid and “shrinking demand” at home. The bureau also noted the growing “risk of stagnation in the global economy” and monetary policy tightening abroad.
In the second quarter, mainland China faced its worst Covid outbreak since the height of the epidemic in early 2020. Strict stay-at-home orders hit the Shanghai metropolis for nearly two months, while travel restrictions disrupted supply chains.
By early June, Shanghai, Beijing and other parts of China were on track to resume normal business operations. In the last few weeks, the central government has reduced the quarantine period and eased some Covid prevention measures.
However, as new cases spike, several parts of China have had to re-impose Covid controls.
As of Monday, Nomura said the regions accounted for 25.5% of China’s GDP under some form of lockdown or extended controls. This was up from 14.9% a week earlier.
Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid containment. Among firms tracked by CNBC, the median forecast at the end of June was 3.4%.
The official GDP target of “around 5.5%” was announced in early March.
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