BEIJING (AP) – China’s economic growth slowed to still strong 7.9% a year earlier in the three months ending in June as the coronavirus rebound stabilized.
As expected, the growth reported on Thursday fell from the explosive 18.3% in the previous quarter, which was amplified from early 2020, when the world’s second-largest economy closed factories, stores and offices. to fight against the coronavirus. China led a global recovery after the ruling Communist Party declared the disease under control last March and reopened most industries.
The United States and other major economies are rebounding, but some are hampered by the spread of new virus variants. The rapid recovery in the United States has led the Federal Reserve to suggest that it may start loosening its stimulus measures sooner than expected, at the end of next year instead of 2023.
China’s growth in the April-June quarter over the previous three months, like other major economies, was 1.3%, reflecting a return to normal factory activity and consumer spending as government stimulus and the credit facility wane. This was up from the 0.6% expansion of the January-March period over the last three months of 2020, but still was among the weakest quarters of the past decade.
“Overall, the Chinese economy appears to be on the right track for recovery,” Chaoping Zhu of JP Morgan Asset Management said in a report. The latest data, Zhu said, suggests that the economy “has already peaked and is returning to its long-term average growth rate.”
China’s outlook is clouded by a persistent trade war with Washington over Beijing’s industrial development tactics. President Joe Biden has said he wants better ties with Beijing, but has yet to say whether he will reverse tariff increases imposed by his predecessor, Donald Trump.
Treasury Secretary Janet Yellen this week called for a “united front” with Europe against China’s “unfair economic practices”. Biden expanded the list of Chinese companies that Americans are prohibited from investing in due to possible military connections.
Yet Chinese manufacturing, auto sales and consumer spending have exceeded pre-pandemic levels.
Exporters benefited from their relatively early return to work while foreign competitors were held back by disease controls. Exports jumped 32.2% in June from a year earlier, although a government spokesperson warned that growth could weaken amid uncertain global conditions.
The International Monetary Fund and private sector forecasters predict economic growth of around 8% this year, but say it is expected to decline in 2022. The government is in the midst of a marathon effort to steer China towards higher growth. slow and more sustainable based on domestic consumption instead of exports and investments.
“With production already above its pre-virus trend, the economy is struggling to gain ground at its usual pace,” Capital Economics’ Julian Evans-Pritchard said in a report. “Head winds to growth are expected to intensify in the second half of the year.”
The Chinese economy shrank 6.8% in the first quarter of last year, the worst performance since at least the mid-1960s. Activity began to recover in the second quarter, when the economy grew. of 3.2% over one year. This accelerated to 4.9% in the third quarter and to 6.5% in the last three months of the year. For the year as a whole, growth was 2.3%, while the US, European and Japanese economies contracted.
In an apparent effort to reassure the public and financial markets, the government made the unusual decision on Thursday to report average growth in the second quarter and the same period of 2020 was 5.5%, compared to 5.0% for the former. quarters of the two years.
Global markets took the update in stride. Benchmarks rose in Hong Kong and Shanghai, while US futures were slightly lower.
Beijing is in the midst of two campaigns to step up oversight of a fledgling industry of online finance competitors such as tycoon Jack Ma’s Ant Group and to reduce risks to the financial system by forcing the real estate industry to reduce its levels of investment. indebtedness.
“Both are going to put downward pressure on growth in the near term,” ING’s Iris Pang said in a report.
Retail spending recovered more slowly than manufacturing, raising concerns that could weigh on the recovery. This led Beijing to inject additional money last week into the pool available for loans to support business and consumer activity. But the central bank and economic planners say they are sticking to plans that call for a return to normal politics.
Retail sales in June increased 12.1%. This was down from 13.9% for the full quarter and well below the 33.9% increase in the January-March period.
“Domestic demand has remained muted,” Louis Kuijs of Oxford Economics said in a report.
Factory output increased 8.3% in June over a year ago and 0.6% from the previous month.
Manufacturers face hurdles, including shortages of processing chips.
Auto production fell 13.7% in June from a year earlier and sales fell 11.1% to 1.6 million, according to the China Association of Automobile Manufacturers. He blamed “an insufficient supply of chips”.
Investment in factories, real estate and other fixed assets rose 12.6% in the first half of the year, but only rose 0.4% in June from the previous month.
National Bureau of Statistics of China (in Chinese): www.stats.gov.cn