China has reported lower-than-anticipated growth in the second quarter, drawing attention to how top officials meeting in Beijing might address the country’s worsening economic challenges.
The world’s second-largest economy faces a real estate debt crisis, declining consumer spending, and an aging population.
Additionally, trade tensions with the United States and the European Union have hampered growth, as these nations restrict Beijing’s access to sensitive technology and impose tariffs to shield their markets from cheap, subsidized Chinese products.
Official data released Monday revealed that China’s economy expanded by just 4.7 percent in the second quarter, marking its slowest growth since early 2023, following stringent COVID-19 containment measures.
Analysts surveyed by Bloomberg had forecasted growth of 5.1 percent. Retail sales, a crucial indicator of consumer demand, increased by only 2 percent in June, down from 3.7 percent in May.
“The external environment remains complex and interconnected,” noted the National Bureau of Statistics. “Domestic effective demand remains insufficient, necessitating further strengthening of the foundation for economic recovery and growth.”
The release of these figures coincided with the commencement of a key meeting of China’s ruling Communist Party, the Third Plenum, led by President Xi Jinping.
During the meeting, Xi presented a “work report” and discussed a draft decision on deepening reforms and advancing Chinese modernization, according to state news agency Xinhua.
While Beijing has not divulged specifics, Xi has signaled significant reform initiatives, which analysts hope will provide critical support to the economy.
“The four-day meeting of the country’s top governing body is eagerly awaited,” remarked Harry Murphy Cruise, an economist at Moody’s Analytics.
However, he cautioned that expectations should be tempered, anticipating modest policy adjustments primarily aimed at boosting high-tech manufacturing and offering some support to the housing sector and households.
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