China’s economy grew at the worst pace in five quarters as efforts to boost consumer spending fell short, piling pressure on Beijing to lift confidence at a twice-a-decade policy meeting this week.
Gross domestic product expanded 4.7% in the second quarter from the same period a year earlier, undershooting economists’ median forecast of 5.1%. Retail sales rose at the slowest pace since December 2022, showing a flurry of government efforts to juice confidence have done little to reinvigorate the Chinese consumer.
“The government will need to mull greater policy supports to deliver its annual growth target of around 5% after the disappointing second quarter data,” said Xiaojia Zhi, an economist at Credit Agricole CIB in Hong Kong. “The increasing likelihood of Trump 2.0 also means that China will need additional policy efforts to boost its domestic demand in a timely manner, as external demand downside risks loom.”
President Xi Jinping is betting on manufacturing and high-tech sectors to propel China’s growth in the post-pandemic era. That strategy already faces uncertainty as Beijing’s trade partners erect new barriers against Chinese goods, with former President Donald Trump threatening more curbs if reelected. The second quarter data shows policymakers will also need to focus efforts on lifting domestic spending to keep the world’s No. 2 economy on track.
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