China’s economy expanded more than 5 percent in the second quarter, official data showed yesterday, buoyed by strong exports, but analysts said that more work was needed to address sluggish consumer demand.
The country’s GDP grew 5.2 percent year-on-year during the April-to-June quarter, matching a prediction by an Agence France-Presse survey of analysts and topping an official growth goal for the year set by the government.
However, it marked a slowdown from the first quarter’s 5.4 percent growth, which was boosted by exporters rushing to shift goods ahead of high US tariffs.
Photo: AFP
“The national economy withstood pressure and made steady improvement despite challenges,” National Bureau of Statistics Deputy Director Sheng Laiyun (盛來運) told a news conference in Beijing.
“Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development and high-quality development made new strides,” he said.
Markets were mixed in response — after a strong start to the day, Hong Kong pared an early rally, while Shanghai dipped into negative territory.
“The figures probably still overstate the strength of growth,” Capital Economics economist Huang Zichun (黃子春) said in a note.
“With exports set to slow and the tailwind from fiscal support on course to fade, growth is likely to slow further during the second half of this year,” Huang added.
Retail sales rose 4.8 percent year-on-year last month, below a forecast in a Bloomberg survey of economists, suggesting efforts to kick-start consumption have fallen flat.
Meanwhile, factory output gained 6.8 percent, higher than the estimate — reflecting continued high demand for Chinese exports that has boosted growth.
However, analysts said that strong exports could be driving deflationary pressures and further dampening already sluggish consumer demand.
Data last week showed that consumer prices edged up last month, barely snapping a four-month deflationary dip, but factory gate prices dropped at their fastest clip in nearly two years.
“Recent efforts to boost spending, such as the broadening of the consumer goods trade-in scheme earlier this year, did temporarily lift retail sales,” Moody’s Analytics economist Sarah Tan said. “However, this support proved unsustainable, with funding reportedly drying up in several provinces. The scheme’s limitations highlight the need for policymakers to address the deeper structural challenges behind consumer caution.”
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