China reports second-quarter GDP growth of 4.7%, missing expectations

BEIJING — China’s National Bureau of Statistics on Monday said the country’s second-quarter GDP rose by 4.7% year on year, missing expectations of a 5.1% growth, according to a Reuters poll.

June retail sales also missed estimates, rising 2% compared with the 3.3% growth forecast.

“We estimate that discretionary retail spending fell at the sharpest sequential pace since the April 2022 Shanghai lockdowns,” Oxford Economics Lead Economist Louise Loo said in a note.

The firm now pegs China’s 2024 GDP growth at 4.8%, higher than the 4.4% it estimated in December 2023 for the year ahead.

Industrial production year-on-year growth in June, however, beat expectations at 5.3%, compared with Reuters’ estimate of 5%. High-tech manufacturing saw an 8.8% increase in value added in June.

Urban fixed asset investment for the first six months of the year rose by 3.9%, meeting expectations. Investment in infrastructure and manufacturing slowed on a year-to-date basis in June versus May, while real estate investment declined at the same 10.1% rate.

Housing-related wealth in China rose by 2.2% in 2023, down sharply from the13% average annual pace between 2016 and 2021, Oxford Economics said in late May.

“We must work harder to invigorate the market and stimulate the internal impetus,” the bureau said in an English-language press release.

It also called for efforts to “consolidate and enhance the momentum for economic recovery and growth, so as to ensure the sustained and sound development of the economy.”

The urban unemployment rate in June was unchanged from the prior month at 5%, the bureau said. The jobless rate for people ages 16 to 24 who are not in school typically comes out a few days after the overall figure. The latest data available showed the youth unemployment rate remained high, at 14.2% in May.

For the first half of the year, average per capita disposable income for city residents was 27,561 yuan ($3,801), a nominal growth of 4.6% from a year ago, the data showed.

Rural disposable income grew at a faster rate, up 6.8% in nominal terms, but at 11,272 yuan, it was less than half that of urban residents.

The National Bureau of Statistics did not hold a press conference for the data release. Separately, China’s high-level policy meeting, the Third Plenum, kicks off Monday.

Bruce Pang, chief economist and head of research for Greater China at JLL, said he was looking forward to how the plenary meeting can boost confidence and stabilize expectations.

More work will be needed for China to reach its target of around 5% growth, because the economy only expanded by 5% in the first half, and growth in the second half will likely be slower, he said.

China’s GDP grew by 5.3% year on year in the first quarter in real terms.

In nominal terms, GDP grew by 3.97% in the first quarter, and 4.01% in the first half of the year, according to data accessed via Wind Information.

China’s exports as a driver of growth have held up better than expected, but there are uncertainties about the future due to trade tensions, said Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science.

He said China could increase its fiscal support and ease monetary policy in the second half of the year.

China’s exports rose by a more-than-expected 8.6% from a year earlier, customs data released Friday showed. But imports fell by 2.3% year on year in June, missing expectations for slight growth.

Retail sales for the first six months of the year rose by 3.7%, with online sales of physical goods rising by 8.8%. Services sector sales rose by 7.5%.

Sales of communications equipment, sports and other entertainment goods, as well as alcohol and tobacco rose by more than 10%. Sales of grain, oil and food jumped 9.6%.

In June, the sports category saw sales drop by 1.5% from a year ago, while alcohol, tobacco and communication equipment saw sales rise.

Cosmetics product sales plunged by 14.6% year on year in June as the worst-performing category.

Catering sales rose by 5.4% in June from a year ago, for 7.9% growth for the first half of the year.

Other measures also pointed to muted domestic demand.

China’s consumer prices rose by 0.2% in June, year on year, missing expectations. Core CPI, which strips out more volatile food and energy prices, rose by 0.6% year on year in June, slightly slower than the 0.7% increase in the first six months of the year.

China’s credit data released Friday showed a sharp drop in the growth of broad money supply and new yuan loans in the first half of the year versus the same period in 2023.

Household loans increased by 1.46 trillion yuan ($200 billion) in the first six months of the year, nearly half the 2.8 trillion yuan in new loans for the category last year, according to the People’s Bank of China.

Loans to businesses increased by 11 trillion yuan in the first half of the year, slightly less than the 12.81 trillion yuan recorded for the same period last year.

“June money and credit data indicated credit demand remained weak,” Goldman Sachs analysts said in a report Friday. “The recent policy communication suggests that the PBOC continues to focus on enhancing monetary policy transmission and downplay the importance of aggregate credit growth. Looking ahead, the growth of new CNY loans and M2 may gradually slow down further.”