2023-07-17 15:48:10
The Chinese economy posted year-on-year growth of 6.3% in the second quarter, a lower-than-expected rate that has cast doubt on whether it will be able to reach its full-year growth target of around 5%. The country is facing various problems such as low consumption, a struggling job market, a long housing crisis or fear of deflation, and as a result, its government is under increasing pressure to present a package of stimulus measures. for the second world economy.
The Asian giant, released since December from the strict control policies of Covid-19, was called to re-emerge as the engine of world growth. However, official data published on Monday showed the persistence of uneven growth, where the problems it is currently facing exceed all expectations, including a slowdown in consumption, high risk in the real estate sector, a drop in exports, a record youth unemployment and skyrocketing public debt.
Gross domestic product (GDP) growth in the second quarter was lower than the 6.8% forecast by Chinese data provider Wind, but higher than the 4.5% in the first quarter, according to data released by the National Bureau of Statistics. In the first half of the year, Chinese GDP grew by 5.5% compared to the same period a year earlier, above Beijing’s full-year growth target for 2023.
Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, grew 4.4% year-on-year last month, up from a 3.5% rise in May. On the other hand, investment in fixed assets – Beijing’s conventional tool to boost growth – increased by 3.8% in the first six months of 2023, in year-on-year terms, below the 4% increase registered in the first five months. of the year. In the case of private investment, a key indicator of individual confidence, it fell by 0.2% compared to the previous year in the January-June period, compared to the fall of 0.1% in the first five months.
Meanwhile, the unemployment rate for the population aged 16 to 24 reached a new high of 21.3% in June, compared to 20.8% in May.
The ballast of the brick
Likewise, real estate investment fell by almost 8% in the first half of the year, which represents a growing decline in a sector that represents up to a quarter of the second economy. The country’s real estate sector is struggling to emerge from a credit crunch after the government cracked down on its debt levels in August 2020. After years of exuberant growth, ghost towns have been built where supply outstrips demand demand, as developers seek to capitalize on the desire for home ownership and real estate investment.
In terms of inflation, China’s annual consumer price index (CPI) held steady in June, a finding that aroused great interest. “Consumer prices are at low times, but the Chinese economy does not meet the conditions to fall into deflation, especially if economic indicators such as the rate of economic growth and the gross volume of money are taken into account,” he declared Monday. Fu Linghui, ONE spokesperson. “GDP grew 5.5% in the first half of the year, much more than other major economies in the world,” Fu said, “as the economy continues to regain momentum amid mounting global headwinds, frustrating those who anticipated otherwise”.
5%, feasible
Chinese analysts say the country is expected to continue to pick up pace in the second half of this year, and that the annual GDP growth target, previously set at around 5%, is within reach.
The country’s recovery has been weaker in line with the International Monetary Fund (IMF) expectations of an “unsettled” recovery of the world economy, as geopolitics, monetary tightening and inflation, although declining, continue to weigh on the rate of growth. The IMF estimates that the Chinese economy will grow by 5.2% in 2023, after an expansion of 3% in 2022, benefiting from a full reopening this year. Some analysts expect the Bank of China to offer more stimulus and the government to boost spending to stimulate growth.
At the beginning of the year, Goldman Sachs had stated that the reopening of the Chinese economy and the full recovery of the country’s domestic demand could raise world production by around 1% in 2023 and cause a rebound in oil prices.
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