The Chinese communist regime has acknowledged that the GDP growth rate in the second quarter of the year was lower than expected, indicating a stagnation or decline in China’s economy. Both domestic and foreign investment and demand continue to weaken, and domestic structural problems are expected to increase government debt risk.
Official data released by the Statistics Bureau shows that China’s GDP grew by just 0.8 percent in April-June compared to the previous quarter, indicating a slowdown in the world’s second-largest economy. However, the year-on-year growth rate in the second quarter reached 6.3 percent, the highest quarterly growth rate in the past two years. The year-on-year growth rate of GDP in the first half of the year reached 5.5 percent, but observers argue that this figure is misleading as it only compares data to the same period last year when economic growth was significantly impacted by the regime’s COVID-19 policies.
The acknowledged economic growth rate in the second quarter was slower than expected, with previous forecasts by Bloomberg, Caixin, and Reuters predicting higher growth rates. Alvin Tan, head of Asia FX strategy at RBC Capital Markets, described the 6.3 percent growth rate as disappointing and a sign that the economy’s recovery trend is slowing down. Additionally, the youth unemployment rate in China reached a record high of 21.3 percent.
Wang He, a current affairs commentator, highlighted that all three economic engines driving China’s growth—domestic demand, investment, and imports and exports—are facing challenges. Consumption has been a major drag on GDP figures, with retail sales falling sharply in June. Investment, particularly private investment, has also weakened, with fixed assets investment relying heavily on government stimulus and contributing to an increase in government debt risk. China’s current inflation rate is zero, which further deters investors and limits consumer spending.
China’s clamping down on real estate developers and e-commerce companies has made private enterprises reluctant to invest, despite verbal encouragement from the ruling Chinese Communist Party. Real estate development investment and sales volumes have both decreased. The official customs data also shows a significant drop in export trade volume and imports in June.
It is widely believed that the Chinese regime has falsified and sanitized economic data, so the true economic situation in China may be worse than official figures indicate. Many commentators and economists predict that China’s economic performance will worsen in the third quarter, and maintaining a growth rate of 5.5 percent this year will be challenging. Lack of confidence among Chinese domestic investors and businesses is seen as a major factor hindering economic recovery.
In such a political atmosphere, characterized by unclear and fluid policies and constant targeting of enterprises and individuals by the regime, businesses and individuals are reluctant to invest and contribute to the national economy. Confidence is seen as crucial for economic growth, and the lack of it in China presents a significant challenge.