China’s GDP grew by 6.3% in the second quarter of 2023 against a growth of 4.5% in the first

The growth of the Chinese economy in the second quarter turned out to be weaker than expected – the indicator increased by 6.3% year-on-year, but by the first quarter the increase was only 0.8%. A slower-than-expected recovery in the Chinese economy is indicated by all major macro indicators, from industrial production to retail sales. At the same time, a sharp deterioration in the dynamics of exports will also affect the demand for intermediate goods and raw materials imported to China, experts say.

China’s GDP in the second quarter of 2023 in annual terms grew by 6.3% against growth of 4.5% in the first, the National Bureau of Statistics of China reported yesterday. However, this estimate was lower than analysts’ expectations (7.3%). This is partly due to a lower base in the second quarter of last year, when a lockdown was introduced in several major Chinese cities. QoQ GDP growth in April-June was weaker than in the first three months of the year: 0.8% against 2.2%.

Note that the official target for GDP growth this year is lower than last year – “about 5%” versus “about 5.5%.” However, last year’s actual growth was well below the benchmark, at 3%. At the beginning of the year, the Chinese authorities lifted restrictions on entry into the country, but the weakening of external demand prevented a rapid recovery in growth – China’s exports increased by only 3.7% in the first half of the year, while imports fell by 0.1% (data in yuan). In the first half of last year, the growth was 13.2% and 4.8%, respectively.

The published statistics of capital investments recorded the continued high growth of investment in infrastructure – over six months they grew by 7.2% (with a fall in investments in real estate by 7.9% – such a decline is a consequence of the policy of the country’s authorities to combat the “overheating” of this market). The growth of investment in production amounted to 6% year-on-year – in the first half of last year, the figure increased by 10.4%. These data indirectly confirm the government’s plans to stimulate the economy, announced in March at the annual session of the National People’s Congress.

Separate data for June also point to weak growth in the Chinese economy – industrial production increased by 4.4% yoy (mom up by 0.68%), while the official PMI in the industry is still below the 50 mark. points separating the growth of activity from its decline (the indicator was 49 points against 48.8 points in May and 49.2 in April). In the services sector, growth in June amounted to 6.8%, while retail sales rose by 3.1% (0.23% mom). Exports in yuan fell by 8.3% in June, while imports fell by 2.6%. At the same time, China’s foreign trade statistics published last week in US dollars indicates a record drop in Chinese exports over the past three years – it decreased by 12.4%, to $285.32 billion, while imports decreased by 6.8% over the month, to $214. .7 billion

Analysts are already adjusting their growth forecasts for China’s economy for the year – JPMorgan has downgraded its estimate to 5% from the previously expected 5.5%. Capital Economics, in turn, notes a weaker growth in capital investments this year and is waiting for the effect of stimulus measures – they should be reflected in additional support for the growth of investment in infrastructure and the real estate market. The weakening of Chinese exports has an impact on the markets of developing countries – through a decrease in demand for intermediate goods and raw materials, experts say.

Note that the data of the International Energy Agency (IEA) have already recorded a decrease in Russian exports of oil and petroleum products in June to 7.3 million b/d, the lowest level since March 2021. At the same time, deliveries to China decreased from 2.4 million to 2.2 million bpd compared to May.

Tatyana Edovina