If even the official figures—which are often polished—appear grim, the reality must be very bad, an analyst says.
China’s economic growth slowed to its weakest pace in three years last quarter, adding pressure on Beijing to introduce more stimulus to meet official targets.
Gross domestic product (GDP) grew by 4.3 percent year over year in the second quarter, according to National Statistics Bureau data released on Wednesday. It slowed sharply from a 5 percent expansion reported in the first quarter and fell short of a 4.5 percent gain forecast by economists polled by Reuters.
It represents the worst reading since the fourth quarter of 2022, when the country was still grappling with the draconian COVID-19 restrictions. It’s also below the full-year growth target of 4.5 percent to 5 percent, the lowest in more than three decades.
For some economic analysts, the latest figures add to indications that China’s economy is losing momentum.
“If even the official figures from the statistics bureau—which often polishes unfavorable data—appear grim, the real situation of the economy must be very bad,” David Huang, a U.S.-based analyst familiar with the Chinese economic situation, told The Epoch Times.
Attention is now turning to the upcoming Politburo meeting at the end of this month, where the Communist Party’s top officials will reveal whether they plan to deliver stimulus to keep the economic engine running.
“Without support, we’re likely to see growth continue to grind lower,” Lynn Song, chief economist for Greater China at ING Bank, said in a note on Wednesday.
Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, doubts the Politburo will signal a wider fiscal deficit, given that exports for now remain strong.
“There is a general consensus among policymakers and researchers that China needs to boost domestic demand,” he said. “But there is no consensus [on] how to do it.”
Deepening Imbalance
Separate official Chinese data released on Wednesday show that retail sales, a measure of consumer spending, rose by 1 percent year over year in June, up from a 0.6 percent decline in May.
Industrial production grew by 5.3 percent from a year earlier, accelerating from a 4.5 percent increase recorded in May.
Exports have surged to a record high. Customs data released Tuesday showed shipments from the country beat expectations, jumping 27 percent in June from a year earlier in U.S. dollar value terms.
The European Union, for example, set an October deadline for Beijing to make progress on the widening trade gap and other unfair trade practices. Last year, the EU recorded the largest-ever trade deficit with China, amounting to 1 billion euros ($1.1 billion) per day.
European Commission President Ursula von der Leyen has signaled potential retaliation if Beijing fails to deliver tangible results by October.
“Dialogue is essential, but the dialogue has to deliver,” von der Leyen told reporters in Cork, Ireland, earlier this month. “We are basically prepared for everything, and we have all the instruments on the table.”
By Dorothy Li
