China's economic growth slowed sharply between April and June, as weak domestic demand and the impact of the Iran war on oil prices overshadowed the country's strong exports, official data showed.
Gross domestic product (GDP) expanded 4.3% in the second quarter from a year earlier, the National Bureau of Statistics said Monday, below Beijing's annual target and down from 5% growth in the first quarter. The reading marks the slowest quarterly expansion since late 2022, when China was emerging from strict Covid-19 restrictions.
The data comes a day after separate figures showed China's exports jumped 27% in June from a year earlier, driven by surging global demand for semiconductors and electric vehicles. However, the economy faces headwinds from a prolonged property market slump and weak consumer spending, with new home prices falling for a 13th consecutive month in June.
In March, China cut its growth target to a range of 4.5%-5%, its lowest since 1991, a move analysts say gave Beijing room to acknowledge pre-existing economic weakness. "There are more external instability and uncertainty factors," the statistics bureau said in a statement, noting an imbalance between strong supply and weak demand.
Retail sales rose 1% in June, improving from a 0.6% decline in May, but analysts warned that businesses are absorbing higher energy and raw material costs because demand is too weak to pass them on. "The longer the Iran war goes on, the more difficult it will become to manage," said Fabien Yip, a market analyst at investment platform IG.
However, Julian Evans-Pritchard, head of China economics at Capital Economics, argued the slowdown may reflect a greater willingness to acknowledge existing weakness rather than a sudden deterioration. "If that's the case, then the GDP figures should not be interpreted as a sign that the economy is suddenly slowing sharply," he said, noting improvements in June data across all indicators.
The Iran war, which began on February 28, has pushed up oil prices and added to global uncertainty, weighing on China's manufacturing sector. Meanwhile, strong exports of tech products and EVs have provided some support, with monthly car exports topping one million for the first time in June.
Source: www.bbc.co.uk