Chinese growth slumps to 0.4% in second quarter: official
China’s economic growth hit its lowest level in two years in the second quarter, official data showed on Friday, with Covid-19 lockdowns and a beleaguered property market pushing a government target even further out of reach.
The world’s second-largest economy grew 0.4% in the April-June period, the National Bureau of Statistics (NBS) said, putting pressure on the Communist Party leadership as it prepares for its 20th Congress, when President Xi Jinping is expected to be handed another five-year term.
The slowdown comes after China’s biggest city, Shanghai, was locked down for two months as it battled a resurgence of Covid, tangling supply chains and forcing factories to halt operations.
Beijing has dug its heels into a zero Covid policy of eradicating virus clusters as they emerge with instant lockdowns and lengthy quarantines, but that has hurt businesses and kept consumers jittery.
“At the national level, the impact of the epidemic persists,” the BES said in a statement on Friday, noting a drop in demand and disrupted supplies.
“The risk of stagflation in the global economy is also increasing,” the statement added, noting that external uncertainties are increasing.
China has recorded a contraction in GDP only once in recent decades, and analysts expect the latest reading to drag full-year growth to around 4%, reducing previous estimates.
Industrial production rose 3.9% year-on-year in June, from 0.7% in May, as Covid controls eased.
Retail sales rose 3.1%, after falling 6.7% in May. The urban unemployment rate was 5.5%, down from 5.9% in May, the NBS said.
Although there are signs that China’s economy has started to recover since Shanghai eased lockdown restrictions in June, analysts expect the pressure on consumption to persist.