A McDonald’s delivery worker walks past pig statues outside an art museum in Beijing on July 10, 2021.
Jade Gao | AFP | Getty Images
BEIJING – China reported GDP growth slightly below expectations in the second quarter, while retail sales and industrial production grew faster than forecast in June.
The country’s gross domestic product rose 7.9% year over year in the second quarter, the National Bureau of Statistics said on Thursday. That fell short of the Reuters estimate of 8.1% for the period April to June.
“Overall, China’s economy appears to be recovering and its annual growth target of 6% has been achieved,” said Chaoping Zhu, global market strategist at JPMorgan Asset Management, in a release.
“However, downside and structural risks to domestic demand are of concern,” he said, citing weak growth in long-term credit and uncertainty over market regulation.
Second quarter GDP rose 1.3% from the first quarter, faster than the 0.6% pace between the first quarter of this year and the fourth quarter of 2020. However, the most recent quarterly increase was still slower than the second quarter .6% of the fourth quarter.
In the first quarter, GDP grew by 18.3%, compared to a decline a year ago.
“China’s economy has steadily recovered,” said the statistics bureau. However, the office added that there were still concerns about the global spread of the pandemic and the “unbalanced” recovery domestically.
Retail sales rose 12.1% year over year in June, more than Reuters’ forecast 11%. The fastest growing category was beverages, up 29.1% over the previous year.
Retail sales growth lagged that of the economy as a whole and fell short of analysts’ expectations for the first two months of the second quarter.
Consumption declined year over year in four provincial capitals – Wuhan, Guiyang, Shijiazhuang and Yinchuan – in May, according to an analysis of public data from Pinpoint Asset Management.
Industrial production grew 8.3%, more than the 7.8% Reuters estimate.
In the past three months, the Chinese authorities have also announced support for companies hit by the rise in commodity prices.
The urban unemployment rate remained constant at 5% in June, while unemployment among the younger 16- to 24-year-olds rose to 15.4% – just as it did in June 2020.
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A reduction in the minimum reserve ratio (RRR) or the level of banks’ reserves should come into effect on Thursday. The first notice from authorities of such a cut surprised investors last week and signaled concerns about slower growth.
The cut is expected to free about 1 trillion yuan (or $ 154 billion) into the economy.
Meanwhile, China’s customs authorities said earlier this week that June exports rose more than expected 32.2%.
Export growth is likely to slow in the second half of the year, said Bruce Pang, head of macro and strategy research at China Renaissance. He cited factors such as high growth in the second half of last year and weaker growth in commodity prices.
China’s slower pace of economic recovery “is still overshadowed by uncertainties and unbalanced growth as employment, household income, consumption, investment in manufacturing, services and private businesses have not yet returned to pre-pandemic levels,” Pang said.
– CNBC’s Yen Nee Lee contributed to this report.