China's GDP Growth Misses Forecast
China’s economy grew by 4.7 percent in the second quarter of 2024 compared to the same period one year before, according to data released by China’s National Bureau of Statistics. This is down from Q1, which saw the growth of real gross domestic product (GDP) at 5.3 percent. GDP refers to the total market value of all goods and services that are produced within a country per year and is adjusted for price changes, making it a useful indicator for economic growth.
Q2 has undershot forecasts of 5.1 percent, raising speculation over whether the country will hit its growth target of around 5 percent for 2024. The cooldown is partly due to the consumer sector, with retail sales increasing at the slowest rate since December 2022.
The country is currently in the midst of a real estate downturn and as part of the plan to counter this, Beijing has pushed to increase manufacturing. But with people less willing to spend, this has led to companies cutting their prices.
China has also boosted its exports and not its imports, resulting in a record trade surplus. While this is good news for China’s hopes of boosting growth, as demand abroad is currently stronger which means factories can keep working, it has also triggered higher tariffs from countries trying to protect their own markets from a flood of Chinese goods.
After an initial spike in growth in Q1 and Q2 of 2021 - calculated against the pandemic quarters of 2020 and sky-high for that reason - Q3 of 2021 brought things back down to earth: Using Q3 of 2020 as a reference, when the pandemic was effectively over in China, GDP growth had begun to normalize.
Prior to the Covid crisis, the Chinese economy had stabilized at an annual GDP growth of around 6 percent following a gradual slowdown from more than 10 percent growth in the first decade of the 21st century. The latest figures are still considerably under this level.
The news comes as the Communist Party leaders are meeting in Beijing on Monday for the third plenum, a meeting held every five years, to discuss an economic plan. Observers waiting to see if further stimulus measures will be announced.