(July 15): China’s economy slowed more than expected last quarter to the weakest in more than three years, as attention turns to what policymakers will do next to make sure their annual growth goal is met.
Gross domestic product (GDP) grew 4.3% from a year ago, according to data released by the National Bureau of Statistics (NBS) on Wednesday, below the bottom of this year’s official target range of 4.5% to 5%. That compares with a 4.5% gain projected by economists polled by Bloomberg, following an increase of 5% in the first quarter.
“The economy ran within a reasonable range,” the NBS said in a statement. “There were many instabilities and uncertainties externally, and the supply-demand imbalance was prominent domestically.”
Fixed-asset investment fell 5.7% in the first half from a year ago, lower than estimated and worsening from the 4.1% decline recorded in the first five months.
Retail sales unexpectedly grew 1% after a 0.6% drop in May. Industrial production beat forecasts and rose 5.3%. The surveyed urban jobless rate eased to 5% from 5.1% in May.
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The extent of the slowdown will likely dominate the agenda when the ruling Communist Party’s decision-making Politburo meets later this month. Officials may choose to accelerate public spending and step up investment in infrastructure projects after cutbacks to expenditure in recent months put the brakes on growth following a surprise pickup to start the year.
Concerns over the health of the world’s second-largest economy have been intensifying since April as growth weakened and became more unbalanced. Though the energy shock unleashed by the war in Iran is helping drag China out of its yearslong deflation, consumer and business confidence is still sluggish.
While exports are soaring to record highs and factory production is holding up well, thanks in large part to the global buildout of artificial intelligence infrastructure, tensions over trade fester abroad, threatening an economy that has become reliant on sales overseas. The risk is that the gains of the boom remain concentrated in a few sectors such as electronics manufacturing and don’t trickle down to the broader economy.
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