The Chinese economy grew at an annual rate of 4.7 percent in the last quarter, slower than expected, the government reported on Monday. At the same time, it stressed that there were signs of improvement in factory production, incomes and investment.
The expansion was well below the annual growth rate of 5.3 percent in the first quarter.
The progress this year, after growth slowed sharply during the Covid-19 pandemic, was “hard-fought,” the National Statistics Office said.
“Since the beginning of the year, the momentum of global economic growth has been weak, inflation has been sluggish, geopolitical conflicts, international trade disputes and other problems have been frequent, domestic demand has been insufficient, companies have been under great operational pressure, and there are numerous risks and hidden dangers in key areas,” it said in a statement.
“There are many difficulties and challenges in promoting stable economic operations,” it said.
Economists say weak consumer demand and reduced government spending are slowing growth in the world’s second-largest economy.
The statistics office said the economy grew by five percent in the first half of the year, meeting the government’s target of around five percent.
On a quarterly basis, the way many countries report their growth, the economy grew by 0.7 percent.
The update came as leaders of the ruling Communist Party agreed to a Conclave held once per decade to pursue an economic policy based on self-sufficient growth strategies in an era of Tensions over trade and technology.
The four-day session of the Communist Party’s 205-member Central Committee is the third plenary session of a five-year term that begins in 2022. This year’s session was scheduled to take place last year but was postponed.
The political measures resulting from the closed meetings are not expected to be announced until days after they end.
Party plenums usually focus on long-term problems, but entrepreneurs and investors are waiting for immediate action to combat a ongoing downturn in the real estate market and persistent discomfort that has suppressed China’s recovery after COVID-19.
Recent bright spots suggest that growth has stabilized.
On Friday, the government reported higher than expected Exports in June This led to a further increase in China’s trade surplus.
Exports rose 8.6 percent compared to the same period last year, but imports fell 2.3 percent. The trade surplus rose to $99 billion from $82.6 billion in May.
The statistics office said on Monday that factory production rose 5.3 percent in June.
Retail sales, a measure of consumer demand, rose 4.1 percent from January to May, while nominal disposable income (not adjusted for inflation) grew 5.4 percent, it said.
But this retail sales figure is well below expectations, noted Yeap Jun Rong of IG.
“The biggest disappointment is likely to be retail sales, whose significant underperformance reinforces the weak state of consumer spending, in line with recent subdued price data and import figures,” he said in a report.
Boosting consumer demand is seen as key to supporting continued strong growth, but it has proven difficult as companies have cut jobs during and since the pandemic and many Chinese families have had to tighten their belts.
Despite the strong start to the year, measures to address the problems have been cautious and ineffective as the housing market continues to weigh on the economy, said Louise Loo of Oxford Economics in a commentary.
“Stagnant household credit growth, consumer confidence and private savings rates suggest there are no signs of a real recovery yet,” she said.
Although exports have surged in recent months, rising tariffs on Chinese electric vehicle imports into the US and Europe will further hamper Chinese manufacturers, forcing them to increase investment and production at a time of weak domestic demand.