While China’s exports rose more than expected in June, imports rose much less than expected. Workers, pictured here, disinfect a container ship terminal in Qingdao on July 13, 2022.
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BEIJING — China posted GDP growth of 0.4 percent in the second quarter from a year earlier, missing expectations as the economy struggled to shake off the impact of Covid controls.
Analysts polled by Reuters had forecast growth of 1 percent in the second quarter.
Industrial production in June also missed expectations, rising 3.9% from a year earlier, versus the 4.1% forecast.
However, retail sales rose 3.1% in June, rebounding from a previous decline and beating expectations for no growth from a year earlier. Major e-commerce companies held a promotional shopping festival in the middle of last month.
Retail sales in June saw a boost from spending in many categories, including autos, cosmetics and drugs. But restaurants, furniture and building materials saw declines. Within retail sales, online sales of physical goods rose 8.3% from a year earlier in June, slower than the 14% rise in the previous month.
Investment in fixed assets for the first half of the year beat expectations, rising 6.1% versus the 6% forecast.
Total investment in fixed assets rose on a monthly basis, rising 0.95% in June from May to an undisclosed figure. While investment in infrastructure and manufacturing maintained a similar or better growth rate from May to June, that of real estate deteriorated. Real estate investment in the first half of the year fell 5.4% from a year earlier, worse than a 4% drop in the first five months of the year.
Unemployment in China’s 31 largest cities fell from pre-pandemic peaks to 5.8% in June, but that for the 16-24 age group rose further to 19.3%.
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The Bureau of Statistics described the latest economic results as “hard-earned gains” but warned of the “long-lasting” impact of Covid and “shrinking demand” at home. The bureau also noted the growing “risk of stagflation in the global economy” and the tightening of monetary policy abroad.
In the second quarter, mainland China faced its worst Covid outbreak since the peak of the pandemic in early 2020. Strict stay-at-home orders hit the metropolis of Shanghai for about two months, while travel restrictions contributed to supply chain disruptions.
In early June, Shanghai, Beijing and other parts of China were about to resume normal business operations. In the past few weeks, the central government has reduced quarantine times and eased some Covid prevention measures.
But different parts of China have had to regain control of Covid as new cases rise.
As of Monday, Nomura said the regions, which account for 25.5 percent of China’s GDP, were under some form of lockdown or heightened control. That’s up from 14.9% a week earlier.
Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls. Among firms tracked by CNBC, the average forecast was 3.4% at the end of June.
The official GDP target of “around 5.5%” was announced in early March.
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