Xi Jinping is running to stabilize China’s struggling economy, as expansion slowed last quarter due to weak customer demand and reduced government spending.
Beijing announced an annual rate of 4. 7% on Monday, July 15, highlighting signs of improvement in commercial production, income sources and investment.
The expansion was particularly lower than the 5. 3% annual expansion rate seen in the first three months of this year. China’s National Bureau of Statistics said the progress was hard-won after the expansion slowed the Covid pandemic dramatically.
He said in a statement: “Since the beginning of this year, the momentum of global economic expansion has been weak, inflation has been persistent, geopolitical conflicts, foreign industry frictions and other problems have frequently arisen, domestic demand is insufficient , corporations are in wonderful operational difficulty, and there are many hidden dangers in key areas.
The firm warned: “There are many difficulties and demanding situations in the proper functioning of the economy. “
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The statistics office said the economy grew fivefold in the first part of the year, in line with the target set by Beijing. In quarterly terms, i. e. the number of countries reporting growth, the economy grew by 0. 7 percent.
It comes as China’s leaders meet in a closed-door conclave to set an economic policy expected to be based on self-sustaining methods of expansion amid industrial and generational tensions.
The four-day assembly of the 205-member Communist Party Central Committee is the third plenary consultation of a five-year term that began in 2022. This year’s assembly was scheduled to take a position last year, but was delayed.
The policies resulting from those meetings will likely be implemented a few days after the end of the conclave. Bert Hofman, former World Bank country director for China and professor at the National University of Singapore, said: “There is a lot of vagueness in the policy direction in China. This is a moment when China will have to show its cards. “
An increase for high-tech industries, seen as important to China’s national security and long-term growth, is still a sure thing, as are related trade policies.
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Party plenums focus on long-term issues, but business owners and investors are watching for any immediate action to counter a prolonged slowdown in the asset market, as well as lingering unrest slowing China’s post-Covid recovery. .
However, there have been some bright spots recently, suggesting that the expansion has stabilized. Beijing on Friday announced higher-than-expected exports in June, further widening China’s industrial surplus.
Exports rose 8. 6% from the same period last year, while imports fell 2. 3%. The industry’s surplus widened to £76. 2 billion ($99 billion), from £63. 6 billion ($82. 6 billion) in May.
Statistics on Monday indicated that commercial output rose 5. 3% in June and retail sales rose 4. 1% in January-May, while nominal disposable income, unadjusted for inflation, rose 5. 4%. .
Yes, Jun Rong of IG said that the point of retail sales decreased much than expected. He said in a report: “Retail sales may be the biggest disappointment, as its significant underperformance reinforces weakness in customer spending, in line with the latest price data and subdued import figures. “
Increased customer demand is seen as key to supporting strong and sustainable growth, but it has proved tricky as companies have cut jobs and since the pandemic, forcing many Chinese families to tighten their family ties. exchange of shares.
Louise Loo of Oxford Economics said in a commentary that despite a good start to 2024, policies aimed at addressing disruptions have been cautious and futile as the asset market continues to weigh on the economy.
She said: “Stagnant growth in household credit, customer confidence and private savings rates are not symptoms of a genuine recovery yet. “
Although exports have increased in recent months, emerging price lists for Chinese EV imports to the US and Europe will add to the obstacles facing Chinese automakers, who are encouraged to increase investment and production at a time of low demand in the domestic market. .
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