Chinese language GDP grows 12.7% within the first half of 2021

China’s financial system continues to get better from the COVID-19 pandemic however development is uneven, in line with not too long ago launched financial information overlaying the primary half of 2021. On July 15, 2021, the Nationwide Bureau of Statistics introduced that the GDP of China was up 7.9% within the second quarter of the yr, in comparison with the identical interval the yr earlier than.

General, China’s GDP grew 12.7% within the first half of 2021, placing the nation on monitor to satisfy its development goal of “over 6%”. China’s financial system grew 2.3% final yr, making it one of many few main economies to report constructive development amid the pandemic.

China has maintained this momentum all through the primary half of 2021, however inside and exterior challenges will power the federal government to reply with coverage options to assist development for the rest of the yr.

GDP development barely beneath expectations

Chinese language GDP development of seven.9% within the second quarter, overlaying the months of April to June, is considerably beneath economists’ expectations. A Caixin survey of economists predicted development of 8.2% within the second quarter, whereas Reuters estimated development of 8.1%.

Second-quarter development was down from the speedy development of 18.3% within the first quarter, which mirrored the weak base brought on by the COVID-19-related disruptions in early 2020. Within the first quarter of 2020, the financial system China contracted 6.8%, because the financial system got here to a halt with the emergence of the pandemic.

In cumulative phrases, GDP grew by 1.3% in comparison with the primary quarter of 2021. Though that is greater than double the expansion charge of the primary quarter of 0.6% in comparison with the fourth quarter of 2020, it’s decrease than fourth quarter development of two.6% over the earlier one. a.

Quarterly GDP Progress in China In the course of the Pandemic

China’s development charges in 2021 look like considerably greater than the same old will increase of round 6-7% earlier than the pandemic, as financial contractions affected the premise used for the comparability. Because of this, the mix of the earlier two years gives one other perspective for decoding the Chinese language financial system relative to pre-pandemic ranges.

The common compound development charge through the second quarters of 2020 and 2021 was 5.5% and 5% for the primary quarters of 2020 and 2021. The compound development charge for the fourth quarter of 2020 and the fourth quarter of 2019 – earlier than the pandemic – was 6.5 p.c.

Put in context, China’s GDP development suggests the nation has rebounded nicely from the pandemic-induced disruption, however shouldn’t be but pulling all cylinders.

Combined development indicators

Different financial indicators present blended efficiency, as most areas are progressively returning to pre-pandemic ranges, however some are displaying vulnerabilities.

Retail consumption was accountable for 61.7% of GDP development within the first half of the yr. Retail gross sales of client items, an indicator of family spending, elevated 23% from 2020 ranges and 9% from pre-2019 pandemic ranges. Nevertheless, they’ve slowed, passing from 33.9% development within the first quarter to 13.9% within the second.

Of complete retail gross sales, 23.7% got here from retail gross sales of bodily items within the first half of the yr. On-line gross sales continued to develop following elevated adoption amid the pandemic, rising 23.2%. In June, retail gross sales rose 12.1% year-on-year, partly as a result of improve in on-line procuring. This development, nonetheless, can also be partly attributable to greater costs because of hovering commodity costs.

Auto gross sales continued to battle as customers held again on costly purchases. Though auto gross sales rose 27% within the first half of 2021 after collapsing within the first half of 2020, gross sales have been nonetheless beneath pre-pandemic ranges. In contrast with 2019, automobile gross sales fell 4.4%, in line with the China Affiliation of Car Producers.

On the similar time, industrial manufacturing development rose from 24.5% within the first quarter to eight.9% within the second. Capital funding elevated 12.6 p.c within the first half of the yr, whereas infrastructure funding elevated 7.8 p.c.

Though China has largely stored COVID-19 underneath management, the tourism sector continues to battle. The nation’s borders are nonetheless principally closed to non-residents, whereas home journey has but to return to pre-pandemic ranges. In June, passenger practice journey fell 19.9% ​​from June 2019, earlier than the pandemic.

In distinction, the meals and beverage business – one other sector closely affected by the pandemic – has rebounded efficiently, with income development of 48.6% to virtually return to pre-pandemic ranges.

What to anticipate within the second half of 2021

Liu Aihua, spokesperson for the Nationwide Bureau of Statistics, was cautiously optimistic in his remarks presenting the statistics.

“Within the first half of this yr, the financial system continued to get better steadily,” Liu mentioned. “The cycle of provide and demand was fluid. The basics have laid a comparatively good basis for financial functioning within the second half of this yr. “

Liu cautioned, “Nevertheless, it must also be famous that the pandemic continues to evolve globally and there are a lot of exterior uncertainties. The restoration of the nationwide financial system is uneven, and we nonetheless want efforts to consolidate the foundations for restoration and growth. “

The announcement of China’s GDP was accompanied by a rest of financial institution reserve necessities, with the goal of stimulating funding. The choice freed up RMB1 trillion ($ 155 billion) of liquidity within the financial system.

Exterior challenges that might negatively influence China’s financial efficiency within the second half of the yr embrace commerce disruptions and weak demand as a result of pandemic, in addition to hovering costs for uncooked supplies and key applied sciences like semiconductors.

Internally, development challenges embrace weak consumption, particularly for big purchases, as customers undertake a cautious method to spending amid financial uncertainty and slowing wage development. Whereas it is a long-term problem, it’s notably pressing within the brief time period, as family spending has but to return to pre-pandemic ranges amid stagnant revenue development and financial downturn. a weaker than standard labor market.

Moreover, Chinese language regulators are persevering with their campaigns to suppress debt and subdue tech giants, creating extra uncertainty within the financial system.

Though the Chinese language financial system faces headwinds within the second half of the yr, it seems on monitor to keep up its reasonable degree of development. The World Financial institution launched an estimate in June that projected China’s GDP development to eight.5 p.c in 2021, earlier than slowing to five.4 p.c in 2022.

China’s development outlook for the rest of 2021 subsequently appears to be like cautiously optimistic, as China will proceed to guide the worldwide financial restoration, however can even face numerous challenges in sustaining development.
Supply: China Briefing

About Edith J.

Check Also

JM Smucker Co. divests non-public label dry pet meals enterprise as a part of continued portfolio optimization

ORRVILLE, Ohio, Dec. 1, 2021 / PRNewswire / – JM Smucker Co. (NYSE: SJM) immediately …