Beijing — Ekhbary News Agency
China's economic expansion significantly decelerated during the second quarter, missing its official annual growth target. Gross Domestic Product (GDP) figures revealed a 4.3% increase from April to June, a notable drop from the 5% recorded in the first quarter. This slowdown comes as weak domestic demand and the ongoing Iran war's impact on global oil prices weighed heavily on the world's second-largest economy, despite a strong performance in exports.
Factors Behind the Slowdown
The National Bureau of Statistics acknowledged "more external instability and uncertainty factors," highlighting an imbalance where robust supply contrasts with subdued domestic demand. Analysts point to persistent challenges, including a prolonged property market slump and cautious consumer spending. New home prices contracted by 0.1% in June, a slight improvement from the prior month, yet retail sales saw a modest 1% rise after a decrease in May. Fabien Yip, an IG market analyst, observed that Chinese businesses are absorbing higher energy and raw material costs because "demand at the till is too weak to bear it," suggesting the Iran war's duration will exacerbate these pressures.
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Reassessing Growth Targets
Beijing had previously adjusted its annual growth target to a 4.5%-5% range in March, the lowest since 1991. Julian Evans-Pritchard of Capital Economics suggests this revision might reflect a greater willingness by authorities to acknowledge pre-existing weakness rather than a sudden deterioration in underlying growth. He argues that the official figures now align more closely with independent estimates, implying the economy's actual slowdown might be less dramatic than perceived. For what it's worth, recent customs data from June offered some positive signals, with tech exports boosted by global semiconductor demand for AI data centers and surging demand for Chinese electric vehicles, pushing monthly car exports past one million for the first time.
