GDP grew by 7.9% in the April-June quarter. This was reported by China’s National Bureau of Statistics on Thursday.
That growth rate was significantly slower than the 18.3% year-on-year growth recorded by China in the first quarter – however, those record-breaking figures largely reflect how much the economy slowed down in early 2020, as the corona virus epidemic hit.
The second quarter growth rate was slightly weaker than expected. Analysts conducted by Reuters predict that China’s economy will expand by 8.1%.
As the world’s second-largest economy loses recovery steam, China is surpassing its annual growth target of more than 6% this year.
Thursday’s data showed retail sales were up 12% in June, while industrial production was up 8.3%.
Concerns for weak growth have grown over the past week, after the Chinese People’s Bank reduced the size of its financial institutions to keep reserves. The move to reduce the reserve demand ratio by 50 basis points took viewers by surprise, a sign that the economic recovery could stumble.
The first cut to that rate from April 2020 is aimed at encouraging banks to lend more, as the central bank says small businesses are facing difficulties as commodity prices rise.
Nevertheless, China released some good news about trade earlier this week. According to customs data, exports rose by more than 30% in June compared to the same period in 2019.
According to Ding Lu, Nomura’s chief economist at China, strong export data has helped ease market concerns about the “immediate recession.”
But Lu said it could be “short-lived” because it issued a call for the destruction of backlogs in some major South Chinese ports.
Prior to Thursday, China’s GDP was forecast to grow by 8.1% in the second quarter, falling to 6.4% and 5.3%, respectively.