Experts projected that China’s exports over the past several months would also have been impacted by geopolitical tensions with the United States, as well as a global economic slump and global inflation.
An AFP survey predicted that China’s economic growth exploded in the second quarter, but researchers believe the results released on July 17 would be falsely exaggerated given the low base of comparison with the pandemic-ravaged year 2022.
With limitations like unexpected lockdowns, travel bans, and manufacturing shutdowns becoming the norm, China recorded a year-over-year growth rate of 0.4 percent in the third quarter of 2016, which was one of its lowest readings in recent years.
The average forecast from a panel of 13 experts consulted by AFP this year indicated that the GDP grew 7.1 percent from April to June.
However, according to Gene Ma of the Institute of International Finance, this amount is “artificially high because of the low base” in 2022.
The 25 million-person financial capital of Shanghai was totally shut down for two months at the same time period last year due to a lockdown.
The quarterly growth figures, which will also be made public on July 17, should provide a more accurate picture of the second-largest economy in the world.
It increased by 4.5 percent year over year in the first three months of this year, which shows a rebound in activity following the abrupt conclusion of the zero-Covid program in December.
However, the rebound, which has been sluggish in several areas, seems to have peaked already.
Fearful of opening wallets
Despite the post-pandemic recovery, consumer confidence is at an all-time low due to the weak labor market and widespread future uncertainty.
Stewart Paterson of the independent Hinrich Foundation stated that “the macroeconomic data shows Chinese people are now just afraid to open their wallets too widely, from holiday travel to shopping for cars and homes.”
According to official data, one in five young Chinese people were unemployed in May. This record may be broken again on Monday when June statistics are released.
According to Harry Murphy Cruise, an economist at rating agency Moody’s, low demand means businesses are reluctant to hire and are instead taking a “wait and see” approach before extending their operations.
They were wary because of the numerous lockdowns in 2022 and the abrupt changes in policy, he claimed.
“Unfortunately, for overall demand to increase, a recovery in business activity is required. The impasse is keeping economic activity anemic, he continued.
This in turn enhances the possibility of deflation, or a drop in prices generally, which would make China’s economic problems even worse.
Producer prices decreased more than anticipated last month, a further indication of poor demand, but inflation remained unchanged.
An existing real estate market issue is impeding growth.
A lack of confidence among prospective purchasers is exacerbated by the fact that many developers, once a driving force behind the economy, are currently battling for their lives.
According to Teeuwe Mevissen of Rabobank, fewer home purchases naturally translate into lower spending on associated items like furniture and greater saving rates as well, all of which contribute to a further decline in activity.
Experts projected that over the last few months, geopolitical tensions with the United States, as well as a global economic slowdown and global inflation, would also have had an impact on exports.
This has historically been a key driver of growth for a nation that was referred to as “the world’s factory” for a long time.
According to the customs numbers, exports plunged 12.4% in June, their steepest decrease in three years.
Authorities are under pressure to respond with stimulus, but aside from a few minor interest rate reductions and promises of action, Beijing hasn’t released anything of substance.
For the entire year 2023, the government has set a growth goal of approximately 5.0 percent.
According to the experts consulted by AFP, China would expand by 5.3% this year, which is in line with the IMF’s forecast of 5.2%.
The economy grew by 3.0 percent last year, which was one of the lowest rates in the previous forty years and much below the official objective of 5.5 percent.