China's Economy Grows at Slowest Pace Since 2022, Misses Annual Target
China's economic growth slowed sharply in the second quarter of 2024, with official data showing gross domestic product (GDP) expanded by 4.3% between April and June. This was below the government's annual target range of 4.5% to 5%, and marked a deceleration from the 5% growth recorded in the first quarter.
The figures, released by China's National Bureau of Statistics, represent the first full quarter of data since the onset of the Iran war on 28 February. The slowdown is attributed to weak domestic demand and the impact of rising oil prices due to the conflict, which have overshadowed the country's strong export performance.
Exports jumped by 27% in June compared to a year earlier, driven by surging global demand for semiconductors used in artificial intelligence data centres and a boom in Chinese electric vehicle sales. Monthly car exports exceeded one million for the first time.
However, domestic challenges persist. The property market remains in a prolonged slump, with new home prices falling 0.1% in June, though at a slightly slower pace than the previous month. Retail sales rose by 1% in June, improving from a 0.6% decline in May, but consumer spending remains weak.
Fabien Yip, a market analyst at investment platform IG, told the BBC that Chinese businesses are absorbing higher energy and raw material costs because demand at the consumer level is too weak to bear price increases. He added that the situation will become more difficult to manage the longer the Iran war continues.
In March, China lowered its annual growth target to 4.5%-5%, its lowest since 1991, a move analysts say provides more flexibility for managing the economy. The National Bureau of Statistics noted 'more external instability and uncertainty factors' and an imbalance between strong supply and weak demand.
The second-quarter growth is the lowest since the end of 2022, when China was emerging from strict Covid-19 restrictions.
