China’s second-quarter economic expansion receded from a staggering 18.3 percent jump in the first three months of the year, with the economic recovery more balanced across sectors.
The world’s second largest economy showed resilience in the retail sector and upbeat growth in factory output in the second quarter. The total value added of its large industrial companies posted an 8.9-percent year-on-year rise during the period, data from the National Bureau of Statistics (NBS) showed on Thursday.
China’s economy continued to recover steadily in the first half of the year, with a 12.7 percent year-on-year GDP expansion for an average two-year growth of 5.3 percent.
By industries, in the first half of 2021, the added value of the primary sector saw a 7.8 percent year-on-year growth, and an average two-year growth of 4.3 percent; the secondary industry grew 14.8 percent year on year, with an average two-year growth of 6.1 percent and the tertiary sector showed a 11.8 percent year-on-year increase, with an average two-year growth of 4.9 percent.
Specifically, the transportation, storage, and postal services and information transmission, software and information technology services increased by 21 percent and 20.3 percent year on year respectively.
Largely due to the slightly lower-than-expected Q2 GDP growth, Liu Ligang, chief economist at Citi Research, lowered his overall forecast for 2021 GDP growth from 8.8 percent to 8.7 percent. However, the lower-than-expected Q2 GDP growth will not derail China’s economic recovery for the whole year, he told CGTN on Thursday.
Consumption rebounded in H1
In the first six months, the total retail sales of consumer goods reached more than 21.19 trillion yuan ($3.28 trillion), up by 23 percent year on year, with an average two-year growth of 4.4 percent, 0.2 percentage points higher than in the first quarter.
And with life in most parts of China returning to normal since the second quarter, online retail sales continue to account for a majority of people’s spending.
The online retail sector reached 6.11 trillion yuan, year-on-year growth of 23.2 percent. Physical goods accounted for 23.7 percent of the total retail sales of consumer goods.
In June, retail sales growth rose further to 4.9 percent from 4.5 percent in May, against market expectations of a decline, which suggests a limited impact from the COVID-19 resurgence in South China’s Guangdong province, thanks to the accelerated vaccination rate and as the public may have become accustomed to sporadic COVID-19 outbreaks, Lu Ting, Nomura’s chief China economist, said in a note sent to CGTN on Thursday.
In addition to the lingering pandemic, some structural reasons, such as income gap, have weighed on the consumption recovery and the downward risk may stay in the second half of this year, Liu said.
Improved trade structure
In the first half of this year, the total value of imports and exports of goods surpassed 18 trillion yuan with 27.1 percent year on year growth. Exports rose by 28.1 percent and imports by 25.9 percent.
With the pandemic still lingering in some countries, the exports of mechanical and electrical products accounted for 59.2 percent of the total value of exports, an increase of 0.6 percentage points over the same period last year.
Investment recovers with acceleration in manufacturing
In the first half-year, China’s investment in fixed assets went up by 12.6 percent year on year, including investment in infrastructure up by 7.8 percent year on year and manufacturing up by 19.2 percent.
With China’s pledge to move toward scientific self-reliance, investment in high-tech industries grew by 23.5 percent year on year, of which investment in high-tech manufacturing and high-tech services increased by 29.7 percent and 12 percent year on year respectively.
More efforts needed amid uncertainties
However, it should be noted that the epidemic continues to mutate global and external instability and uncertainty, Liu Aihua, NBS spokesperson, told a news conference Thursday morning.
At home, the economic recovery is unbalanced and more efforts are needed to consolidate the foundation for steady recovery, she said.
With more countries recovering from the pandemic, consumption is rebounding in China and durables exports will cool down in the rest of this year, Lu said for the outlook on China’s economy in the second half of the year.
Therefore, as one of the first countries in the world to recover from the pandemic, China may encounter downturn pressure earlier than other countries, but the government has determined to reduce dependence on external markets and technology and no longer relies on real estate for growth, he said.
“Beijing’s policy easing, including the 50bp RRR cut and some supportive fiscal measures, will be helpful for growth but is unlikely sufficient to reverse the growth downtrend, as the drag from the slowing property sector appears too strong to fully offset,” Lu said, maintaining his forecast for real GDP growth to slow further to 6.4 percent year on year in Q3 and 5.3 percent in Q4.