(Beijing) Sudden slowdown: China saw its economic growth collapse in the second quarter to sign its worst performance since 2020, due to health restrictions and a real estate crisis that strongly penalized activity.
Updated yesterday at 23:38
According to official figures published on Friday, the gross domestic product (GDP) of the world’s second-largest economy grew in one year by just 0.4% during the April-June period.
This is its weakest growth rate since the beginning of 2020, when in the first quarter COVID-19 paralyzed activity in China (-6.8%).
This decline was widely anticipated. However, a group of analysts surveyed by AFP expected a much more moderate slowdown (1.6%).
Although subject to caution, China’s official GDP figure is still closely scrutinized, given the country’s weight in the world economy.
In the first quarter of 2022, the country’s gross domestic product (GDP) grew by 4.8% year-on-year.
The economy has faced an “extremely unusual” situation due to the international context and COVID-19 in China, said an official from the National Bureau of Statistics (NBS), Fu Linghui.
Result, from one quarter to another, the growth of the Asian giant contracted by 2.6%, after an advance of 1.3% in the January-March period.
Weight of zero COVID-19
Since 2020, the country has applied a zero COVID-19 policy, which consists of avoiding the appearance of new cases as much as possible through targeted lockdowns, mass screening, the quarantining of people who test positive, and the follow-up of movements.
In the spring, the economic capital of Shanghai was locked down for two months in response to the country’s worst outbreak in two years.
A similar confinement was considered for a time in May in Beijing, the capital and heart of political power.
These measures have dealt a heavy blow to the economy, with many companies, factories and businesses forced to cease operations, and supply chains under strain.
Against this background, positive GDP growth in the second quarter is “hard to believe,” according to Julian Evans-Pritchard, an economist at Capital Economics.
In June, retail sales, the main indicator of household spending, however, rose strongly (+3.1% in one year), after the third consecutive month of decline in May (-6.7%).
For its part, industrial production increased by 3.9% year-on-year last month, after an unexpected rise of 0.7% in May.
The rebound in the epidemic adds to the difficulties that were already weighing on the Chinese economy: slow consumption, Beijing’s turn of the screw against various dynamic sectors, including technology, uncertainties linked to Ukraine but also the real estate crisis.
In June, new home prices contracted again (-0.5% year-on-year), according to the SNB.
This is the second month of decline for this index that aggregates the average price in 70 cities in China.
In addition, “a growing number of buyers are failing to pay their monthly installments due to the economic slowdown and delays” of the promoters due to the progress of the works or the delivery of keys, emphasizes the economist Betty Wang, of the ANZ bank.
As for the unemployment rate, it stood at 5.5% in June compared to 5.9% the previous month.
Specially monitored by the authorities and calculated only for urban dwellers, the unemployment rate had reached an all-time high of 6.2% in February 2020, at the height of the epidemic, before falling.
Beijing has set a target of GDP growth of “around 5.5%” this year, which many economists doubt will be achieved.
This figure would mark China’s weakest growth rate since the early 1990s, excluding the COVID-19 period.
This growth slowdown comes in a politically sensitive year in which, barring a cataclysm, Xi Jinping should be reappointed as head of the Chinese Communist Party (CCP) in the fall.
Last year, the country, then recovered from the impact of the first epidemic wave, had generated a GDP of more than 8.1% for all of 2021.
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