China’s growth slowed to its weakest pace in almost three decades in the second quarter, with the US-China trade dispute and weakening global demand weighing on the world’s No. 2 economy, official data showed yesterday.
The slowing economy makes it more difficult for Chinese President Xi Jinping (習近平) to fight back forcefully against Washington, which is using tariffs as leverage to try to force Beijing into opening up its economy.
The 6.2 percent GDP figure released by the Chinese National Bureau of Statistics was in line with a survey of analysts by AFP and down from a 6.4 percent expansion in the first quarter.
The GDP figures are within the government’s target range of 6 to 6.5 percent for the whole year, down from the 6.6 percent growth China put up for last year.
“Economic conditions are still severe both at home and abroad, global economic growth is slowing down and the external instabilities and uncertainties are increasing,” bureau spokesman Mao Shengyong (毛盛勇) said. “The economy is under new downward pressure.”
Beijing has introduced measures including a massive tax cut to boost the economy, but they have not been enough to offset a domestic slowdown and softening overseas demand — made worse by a punishing trade dispute with its biggest trading partner country, the US.
Total exports rose only 0.1 percent year-on-year in the first six months.
Analysts expect Beijing to step up support in the coming months.
“There is still much room for policy maneuvering,” Mao told reporters.
Monetary easing is expected to help boost the economy, and the central bank on Monday finalized a previously announced cut to the amount of cash that small and medium-sized banks hold in reserve.
With this year marking the 70th anniversary of the founding of the People’s Republic of China, politics necessitates healthy growth, Australia and New Zealand Banking Group Ltd economist Raymond Yeung (楊宇霆) said.
“The Chinese government will not allow the quarterly growth to fall below 6 [percent],” he said in a note.
Last month held bright spots for the economy.
Industrial output rose 6.3 percent, from 5 percent in May, which was the slowest increase since 2002.
Fixed-asset investment also picked up, rising 5.8 percent year-on-year in the January-to-June period, from 5.6 percent in the January-to-May period.
China’s 1.3 billion consumers continued to open their wallets, with retail sales growing 9.8 percent year-on-year in June, up from 8.6 percent in May.
“A stronger end to the quarter didn’t prevent growth from slowing in [the second quarter] and we see more weakness on the horizon,” Capital Economics Ltd economist Julian Evans-Pritchard said in a note.
Sales of big-ticket items such as cars have not held up, with sales down 12.4 percent in the first half of the year, the China Association of Automobile Manufacturers said.
Growth in infrastructure investment has also retreated from years of near 20 percent expansion, coming in at a 4.1 percent rise in the January-to-June period.
Imports and exports also shrank last month, while the urban unemployment rate ticked up to 5.1 percent for the month.
Meanwhile, extreme weather and highly contagious African swine fever have sent food prices skyrocketing, especially for meat, with the size of the world’s largest pig herd down 15 percent in the first half of the year.
The trade dispute with the US has hit demand for China’s goods, compounding slowing demand from the rest of the world. High-level trade talks to resolve the issues resumed this month, but the gulf between the two sides remains wide.
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