GDP rose by 7.5% between April and June compared to the same period last year. This is down from 7.7% during the first three months of this year, and down by 7.9% during Q4 last year.
Analysts have long been predicting a slowdown in the economic growth of the world’s second largest economy and these numbers are in line with their consensus. Importantly, it is also in line with figures that China’s authorities have been expecting to see.
It has been apparent for the past few quarters – the past five have seen sub-8% GDP growth – that China is changing its policy to encourage domestic consumption rather than fixed asset investment. This is going to be a big ask as consumer spending is around one third of GDP comapred to close to 50% for Western economies.
At the same time, China announced that its industrial production grew by 8.9% in June, down from 9.1% in May, representing the slowest pace of growth since 2009. Its fixed-asset investment grew 20.1% between January and June having grown 20.4% in the first five months.
On the consumer side, retail sales grew 13.3% in June copmared to a year earlier, and by 12.9% compared to May’s figures.
China’s finance minister, Lou Jiwei, recently hinted that growth may fall below the 7.5% target set in March and could reach 7% by the end of this year.
