"China’s second-quarter economic growth fell short of expectations, hindered by weak consumption and declining property investment, adding to challenges for Beijing to hit its annual growth target". https://t.co/n1bvXarQK0
— Jojje Olsson (@jojjeols) July 15, 2024
China’s economy grew by just 4.7% in the second quarter compared to the previous year, according to new figures released on the opening day of the Communist Party’s “third plenum” meeting. This growth, weaker than expected and slower than the previous quarter, casts doubt on the government’s official growth target of around 5% this year. The data reveal deeper issues beneath the headline figure.
China GDP expanded 4.7% y-on-y in 2Q, below Beijing's target of 5%https://t.co/Gg0PUXQKEk via @economics
— Javier Blas (@JavierBlas) July 15, 2024
Nominal growth, which does not account for inflation, lagged behind the price-adjusted figure, indicating continuing price declines across the economy. By this measure, China has endured its fifth consecutive quarter of deflation. The implications of these economic challenges are significant.
The Chinese economy is in the doldrums, so how does the Chinese Communist Party tackle the problem? In its typical fashion for any bad news: censorship. https://t.co/phf4ZGGWci
— Kenneth Roth (@KenRoth) July 15, 2024
The current trends suggest that the efforts by the Chinese government to stimulate growth might not be enough to hit their targets, raising questions about the sustainability of their economic policies and the measures needed to reverse this downturn. As China’s leaders deliberate over the coming days at the Jingxi Hotel in Beijing, known for its homemade yogurt and its historical importance in hosting key Chinese Communist Party meetings, finding practical solutions to these economic troubles will be crucial. The pressure is on to balance necessary reforms with strategies to stabilize and stimulate the economy, ensuring that the headlines do not continue to sour in the months ahead.
Passersby on the streets of Beijing shared they were not expecting growth to bounce back anytime soon. “I think the economy is really under pressure,” Yu Qi, a 55-year-old insurance industry worker, said.
China’s economic growth challenges
China’s GDP in H1 2024 expanded by 5% and exceeded RMB 60 trillion. Imports & exports of goods reached a new record high of RMB 21.2 trillion. The Chinese economy performed well and remains an important anchor & engine for the global economy. pic.twitter.com/6FtyDcU4hd
— Zhang Meifang (@CGMeifangZhang) July 16, 2024
This year, it’s really the case for everyone, whether it’s businesses or individuals. We’re really feeling that pressure,” he explained. A key drag on the Chinese economy has been waning consumption. Data on Monday showed retail sales slumped again last month to just 2%—down from 3.7% in May.
Thirty-nine-year-old Zhao Qing said she was trying to cut down on her spending. “Two years ago, we used to go out for hotpot in restaurants. But now, to save a bit, we’re cooking at home instead,” Zhao said.
President Xi Jinping has promised significant reforms. Officials say they want to reorient the economy away from state-funded investment – basing growth on high-tech innovation and domestic consumption. Beijing has said it is aiming for 5% growth this year – enviable for many Western countries but a far cry from the double-digit expansion that for years drove the Chinese economy. Li Xiaojing, 43, recalled the years of “staggering” growth and remarked that it was “understandable” for the economy to be recalibrating now.
“But we are worried about the future; we think that the economy is going to stagnate for a relatively long time, so there is some pessimism,” she said. The desire to consume is diminishing; everyone is tending to manage their money a bit more strictly and to save more,” Li added.
