Thursday November 21, 2019

CHINA’S GDP GROWTH SLOWS TO 7.5 PERCENT IN APRIL TO JUNE

July 19, 2013

 

On Monday, July 15th, the National Bureau of Statistics of China released the new economic data in the first half of 2013. According to preliminary estimates, the gross domestic product (GDP) of China in the first half of this year was 24,800.9 billion Yuan, a year-on-year increase of 7.6 percent calculated at comparable prices. GDP growth was 7.7 percent in the first quarter and went down to 7.5 percent in the second quarter.

These new figures represented a progressive slowdown compared with the same period a year earlier, although they were in line with analyst expectations. The government’s annual GDP target, 7.5 percent, was marked as the lowest rate of expansion in 23 years for China.

This slowdown was not surprising to China’s new government. In fact, it was regarded as the result of government changes. According to Ma Jiantang, the head of National Bureau of Statistics of China, overall the national economy was still undergoing “steady development and grew at a moderate pace.”

Mr. Ma pointed out that the data matched the government’s target and the consensus estimate from private forecasters. Besides the growth of GDP, industrial production grew steadily with enterprises’ profits continuing to increase. Consumer price rose at a stable rate. Residents’ incomes grew steadily.

In addition, Ma highlighted that 7.5 percent of GDP growth in the second quarter of this year was achieved under a very complicated global economic environment and this “diverged” GDP was a result of new leaders’ strategies of economic reforms, which aimed to reduce China’s reliance on exports and investment to encourage more domestic consumption. These reforms are part of a long-term vision of pursuing consumer-led growth.

The main worry for China’s leaders is employment as high unemployment from the economic slowdown could provoke social unrest. So far government officials say employment is stable. New Premier Li Keqiang suggested that government has no intention of providing economic stimulus in response to this protracted slowdown.

Even though the government believes that the slowdown is short term, it has attracted international worries.  The International Monetary Fund warned China on Wednesday that “even its current pace of expansion may be unsustainable unless the country starts making significant and systemic changes to its economy, and soon.”

Although international worries have been increasing since the new data of China’s first half year economic growth was released, overall the target of China’s target of 7.5 percent annual GDP growth is still achievable.

The economy showed signs of losing momentum at the end of the quarter, with industrial output growth falling to 8.9% in June from 9.2% in May, reported by The Wall Street Journal. Companies that sell to China may struggle with their revenues, especially those companies that export natural resources to China since China relies on these imports for heavy manufacturing.

The new released GDP is important as it provides a very complete portrait of the world’s second largest economy. It is a benchmark for China’s new leaders and their government to gauge their economic reform. Also, some analysts worry that China might lose more steam in the coming quarters. China’s high demand for goods has been a key support for global growth. The fall in that demand means the global economic growth might slow down sharply with China in this coming fall.

For more information about China’s GDP Growth, see the following news articles:

The National Bureau of Statistics of China – “China’s Economy in the First Half of 2013: Stable and Moderate Growth

Wall Street Journal – “China’s Slowing Economy, An Illustrated Guide

New York Times– “China’s GDP Growth Slows as Government Changes Gears

Reuters – “China economic slowdown seen deepening as Beijing pushes reform

CNN – “China GDP Growth Slows to 7.5%

BBC – “China Media: Economic slowdown

For Chinese language news on China’s GDP growth, see the articles below:

Xinhua (新华网) – “马建堂解码中国经济半年报:坚决走新增长之路

Renmin (人民网) – “增速7.5%: 中国经济该怎样守住底线?

Takungpao (大公报) – “中國經濟續放緩 振興政策或必要

Compiled and edited by Weiran Liu