BEIJING, July 15 (NNN-AGENCIES) – China’s economic growth slowed to 6.2 per cent in the second quarter from a year earlier, the weakest pace in at least 27 years, as demand at home and abroad faltered amid an escalating trade war with the United States.
Monday’s official growth data marked a further loss of momentum for the economy from the first quarter’s 6.4 per cent, raising expectations that Beijing needs to announce more support measures to boost consumption and investment and restore business confidence.
Analysts polled by Reuters had forecast gross domestic product (GDP) in the April-June quarter rose 6.2 per cent.
“Economic conditions are still severe both at home and abroad, global economic growth is slowing down and the external instabilities and uncertainties are increasing,” said National Bureau of Statistics spokesman Mao Shengyong.
“The economy is under new downward pressure,” he said in prepared remarks.
China’s trading partners and financial markets are closely watching the health of the world’s second-largest economy as the Sino-US trade war gets longer and costlier, fuelling worries of a global recession.
Exports to the world rose only 0.1 per cent on-year during the first six months.
Analysts widely expect Beijing will step up support for the economy in coming months.
There were bright spots for the economy in Monday’s economic data.
Industrial output rose 6.3 per cent in June, from 5.0 per cent in May, which was the slowest increase since 2002.
Fixed-asset investment also picked up, rising 5.8 per cent on-year in January-June, from 5.6 per cent in January-May.
But growth in infrastructure investment has retreated from years of near 20 per cent expansion – coming in at 4.1 per cent growth in January-June – and imports and exports both shrank in June from a year earlier.
Urban unemployment ticked up to 5.1 per cent for the month, from 5.0 per cent in May.
China’s 1.3 billion consumers have continued to open their wallets however, buoying the economy.
Retail sales grew 9.8 per cent on-year in June, up from 8.6 per cent in May.
Sales of big-ticket items such as cars have not held up, though, with sales down 12.4 per cent in the first half of the year, according to the China Association of Automobile Manufacturers.
The trade war with the US has hit China’s economy, compounding a global slowdown.
“The China GDP data was very much in line with consensus confirming the markets view that the economy continues to slow, and while GDP touched 27 years low in Q2, the on consensus print does lessen the market fears that China’s economy is headed for a hard landing,” said Stephen Innes, managing partner at Vanguard Markets.
“As such risk assets will respond favourably but it’s hard to escape the economic realities that the US-China trade war is having on global economies.”
Altogether the two economic giants have slapped each other with punitive tariffs covering more than US$360 billion in two-way trade, damaging manufacturers on both sides of the Pacific.
It helped propel China’s manufacturing activity into contraction last month.
China’s exports to the US dropped more than 8 per cent over the first half of the year.
NNN-AGENCIES
