China's GDP increases and misses expectations in the next quarter

July 18, 2022: -China eked out GDP growth of 0.4% in the second quarter from a year ago, which missed expectations as the economy struggled to shake off the impact of Covid controls.

In June, industrial production cut expectations, increasing by 3.9% from a year ago versus the 4.1% forecast.

Although, retail sales in June rose by 3.1%, recovering from a before slump and beating expectations for no growth from the preceding year. Major e-commerce companies held a promotional shopping festival in the middle of last month.

Retail sales in June saw a boost from spending across many categories, including autos, cosmetics, and medicine. But catering, furniture, and construction materials saw a decline. Within retail sales, online sales of physical goods grew by 8.3% from a year ago in June, slower than the 14% growth the prior month.

Fixed asset investment for the year’s first half came in above expectations, up 6.1% versus 6% predicted.

Overall fixed asset investment picked up every month, rising by 0.95% in June from May to an undisclosed figure. At the same time, investment in infrastructure and manufacturing maintained a similar or better pace of growth from May to June, and real estate worsened. Investment in real estate in the first half of the year fell by 5.4% from a year ago, worse than the 4% decline in the first five months of the year.

Unemployment across China’s 31 biggest cities fell from pre-pandemic highs to 5.8% in June, but that for the age 16 to 24 category rose further to 19.3%.

The statistics bureau described the recent economic results as “hard-earned achievements” but warned about the “lingering” impact of Covid and “shrinking demand” at home. The bureau noted the rising “risk of stagflation in the world economy” and tightening monetary policy overseas.

On Friday, during a press conference, statistics bureau spokesperson Fu Linghui said economic indicators in the second quarter halted a downward trend. He said that the impact of Covid was “short-lived” and emphasized how China’s inflation is far below that of the U.S. and Europe. Fu further said that ” challenges ” exist to achieving the full-year economic targets.

In the second quarter, mainland China faced its worst Covid outbreak since the height of the pandemic in early 2020. Strict stay-home orders hit the metropolis of Shanghai for approximately two months, while travel restrictions contributed to supply chain disruptions.