China’s Xi on brink as Beijing’s post-Covid economic bounce halves overnight

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The gross domestic product (GDP) in Xi Jinping’s nation increased by 7.9 percent in the second quarter of this year, compared to the same time last year. This was less than half the rate seen in the previous quarter.

Official figures for June also found a better-than-expected growth for retail sales and industry production.

However, economists have raised concerns over the recovery of the world’s second largest economy.

The National Bureau of Statistics (NBS) said in a statement: “China’s economy sustained a steady recovery with the production and demand picking up.

“The epidemic continues to mutate globally and external instabilities and uncertainties abound.”

Liu Aihua, an official at the NBS, said: “The domestic economic recovery is uneven.

“We must also see that the global epidemic continues to evolve and there are many external instabilities and uncertain factors.”

Xing Zhaopeng, senior China strategist at ANZ in Shanghai, warned: “Based on the current situation, if policymakers do not act, the GDP figures in Q4 could fall out of the reasonable range as data from last Q4 was shining.

“I expect the government to roll out targeted easing measures.”

Despite the slow growth, UOB economist Woei Chen Ho in Singapore said the “momentum is fairly strong”.

She said: “The numbers were marginally below our expectation and the market’s expectations (but) I think the momentum is fairly strong.

“Our greater concern is the uneven recovery that we’ve seen so far and for China the recovery in domestic consumption is very important.

“Retail sales this month were fairly strong and that may allay some concerns.”

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Julian Evans-Pritchard, senior China economist at Capital Economics, added: “Headwinds to growth are likely to intensify during the second half of the year.

“China’s COVID-19 export boom appears to have peaked and will unwind over the coming quarters as vaccine rollouts and reopening help to normalise global consumption patterns.”

The record high prices for commodities, like iron ore and copper, helped push China’s factory inflation to the highest level in more than a decade.

The country also saw supply chain disruptions as shipping firms were hit with backlogs.

The NBS data showed China’s industrial output grew 8.3 percent in June from a year ago, slowing from an 8.8 percent rise in May.

Economists previously predicted a 7.8 percent year-on-year rise.

Retail sales grew 12.1 percent from a year earlier in June.

China was the only major economy to avoid a contraction last year, expanding by 2.3 percent.

In April, official figures showed China’s economy grew a record 18.3 percent in the first quarter of 2021 compared to the same quarter last year.

This was the biggest jump in GDP since China started keeping quarterly records in 1992.

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