China’s statistics bureau on Monday reported solid expansion for the country in the first part of 2024, but analysts say the ongoing asset crisis and slow call for domestic investment continue to weigh on the world’s second-largest economy. world.
Meanwhile, the U. S. economy is expected to stabilize in the second half of 2024 and into next year, currency audit and advisory firm Deloitte predicts, and clients are calling for staying strong. Updated official figures for the United States will be published on July 25.
China’s National Bureau of Statistics reported on Monday that the country’s GDP grew by 5% in the first part of 2024. The second quarter recorded a year-on-year expansion rate of 4. 7%, down from an expansion of 5. 3%. % of the first quarter, indicating a slower speed but still physically powerful compared to other primary economies.
“Although GDP expansion in the second quarter is lower than in the first quarter, it is still a rapid expansion among primary economies, which offers a solid basis for reaching the annual GDP target,” the state-run Global Times quoted it as saying. The Chinese economist Chen Fengying, as said.
Beijing once again set an economic expansion target of “around 5%” this year, after reaching 5. 2% in 2023. However, many experts on the subject, including former Chinese number two Li Keqiang, did not take the country’s expansion figures seriously. face value.
The release of the information coincided with the start of the third plenary session in Beijing, where senior officials are expected to talk about reforms to boost economic expansion in the second part of the year.
“After a good start to the year thanks to infrastructure and borrowing measures at the end of 2023 and strong exports, the economy returned in the second quarter to just under 3% annualized GDP expansion, which is very much in line with its final estimate of medium-term expansion,” George Magnus, spouse of the University of Oxford’s China Centre and former chief economist at investment bank UBS, told Newsweek.
He noted that still-weak income after the pandemic and the ongoing real estate crisis, which began with the default of mega-developer Evergrande in 2021, continue to hamper the country’s expansion prospects.
Retail sales of goods, a gauge of domestic demand, rose 3. 7% year-on-year, down from 7. 2% reported for 2023.
“The long-term trajectory of our economy remains solid and healthy, the momentum of progress remains strong, and our commitment to high-level opening-up remains as strong as ever,” said Liu Pengyu, spokesperson for the Chinese Embassy in China. USA. States. . .
He highlighted the double-digit expansion seen in smart and green sectors, in line with President Xi Jinping’s vision of “new and productive forces” as the future of the economy. The production of electric cars increases by 34. 3%, that of 3D printers by 51. 6% and that of embedded circuits by 28. 9% year-on-year.
Liu added that the Third Plenum will strengthen connectivity between China and the world and “draw up a new plan for China’s economic and social development. “
Washington reported a slower GDP expansion rate of 1. 4% year-on-year during the first quarter, down from a 3. 4% expansion in the third quarter of 2023.
The U. S. Department of Commerce’s Bureau of Economic Analysis attributed the first-quarter growth to higher consumer spending, real estate investment, business investment, and state and local government spending, offset by lower investment in stocks and an increase in imports.
The Dow Jones hit an all-time high on Tuesday after the U. S. Census Bureau released an initial estimate of customer demands for June. Retail sales are estimated to have increased by about 2. 5% over the same period last year, excluding value changes.
Deloitte economist Robyn Gibbard noted in research published last month that the U. S. economy grew more slowly in the first quarter, forecasting the expansion will reach 2. 4% for all of 2024 before slowing at a faster rate. modest 1. 1% next year.
The analyst, however, remains optimistic. “Consumer spending is expected to remain strong in the first part of 2024 due to sustained innovations in the labor market and solid levels of spending in the business and government sectors,” he wrote.
China’s economy, once the world’s largest economy, is no longer on that trajectory.
World Bank data shows that the gap between the two major economies widened last year. China’s length is only two-thirds that of the United States, up from 70% in 2022 and 76% in 2021.
Updated on 07/19/24, 1:40 p. m. ET: This article was updated with a comment from the Chinese Embassy and more context.
Micah McCartney is a Newsweek reporter based in Taipei, Taiwan. It covers United States-China relations, security issues in East and Southeast Asia, and China-Taiwan relations.
You can contact Micah by emailing m. mccartney@newsweek. com.
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