China recorded its slowest economic expansion since the initial covid outbreak on Friday, with growth of 0. 4% in the current quarter, as lockdowns and weakness in the housing market made the government’s target even further out of reach.
Beijing has clung to a 0 Covid policy of eliminating virus clusters as they emerge with instant lockdowns and long quarantines, but this has hurt businesses and kept consumers nervous.
The slowdown comes after China’s largest city, Shanghai, was cordoned off for two months as it battled the resurgence of the virus, counting supply chains and forcing factories to shut down operations.
“At the national level, the influence of the outbreak persists,” National Bureau of Statistics spokesman Fu Linghui said Friday, noting a drop in demand and disruptions in sources.
“Stagflation in the global economy is also increasing,” he told reporters, adding that external uncertainties were increasing.
The economic expansion for the April-June era in the world’s second-largest economy also fell 2. 6% in the latest quarter, according to the NBS.
China’s economic expansion reached 0. 4 in the current quarter, a two-year low, according to official data released on Friday Photo: AFP/STR
China has recorded a contraction in GDP once in recent decades, and analysts expect the most recent reading to be a slower expansion throughout the year.
Still, trade production rose 3. 9% year-on-year in June, up from 0. 7% in May when Covid controls were relaxed, while retail sales rose 3. 1% after falling 6. 7% last month, which analysts called an encouraging sign.
The economy is “on track for a slow recovery,” said Zhiwei Zhang of Pinpoint Asset Management.
“However, the economic expansion is still well below its potential, as concerns about covid outbreaks continue to hurt customer and business confidence,” he added in a note.
The urban unemployment rate fell to 5. 5% in June, according to NBS data.
But the number of young people aged 16 to 24 is particularly higher than 19. 3 percent, adding to the demanding situations in a year with a record number of university graduates.
Economists have long had the accuracy of China’s official data, suspecting that the figures are being manipulated for political purposes Photo: AFP/STR
In Shanghai, where GDP plummeted 13. 7 in the current quarter, the unemployment rate stood at 12. 5 Array.
Economists have long had the accuracy of China’s official data, suspecting that the figures are being manipulated for political purposes.
China’s growth in the current quarter is “difficult to reconcile with the significant effect of the shutdowns,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Even taking into account june’s strength, knowledge is consistent with a negative year-on-year expansion in the last quarter,” he added.
The knowledge comes at a time of developing demanding situations in China’s key real estate sector, which by some estimates accounts for a quarter of gross domestic product, with home sales weak in recent months.
An increasing number of homebuyers also refuse to pay their mortgages for fear that their homes won’t be built on time.
“We remain cautious about customer expansion in the current part of the year, as the spread of the much more contagious variant of Omicron across the country may cause a new circular of widespread lockdowns,” Nomura’s lead economist in China, Ting Lu, told AFP.
With homebuyers disrupting loan payments, this “could lead to a vicious cycle in the real estate sector, and a synchronized global slowdown is likely to affect the export sector,” he added.
The news is ratcheting up tension in the leadership of the Communist Party, which is preparing for its 20th Congress, at which President Xi Jinping is expected to assume a third five-year term.
Analysts expect the government’s target of around 5. 5% expansion this year to be achieved, given that it will require a sharp acceleration of expansion in the current part of the year.