China's economy grew at 4.3% in the second quarter of 2024, marking one of the weakest quarterly performances since official GDP records began in the early 1990s. The figure, released by the National Bureau of Statistics on Wednesday, fell short of the government's target range of 4.5% to 5% and was only higher than the 2.9% growth recorded in the final quarter of 2022, when China was still under strict Covid-19 restrictions.
Exports Surge While Domestic Demand Struggles
The GDP data came alongside customs figures for June showing a 27% surge in exports. Monthly car exports exceeded 1 million units for the first time, but domestic vehicle sales plunged by more than 16%. Retail sales, excluding cars, rose 3% in June, yet economists argue that sustained consumption growth is needed to rebalance the economy away from exports, which now account for about 20% of GDP.
Economists Call for Stimulus Measures
Analysts are closely watching the Chinese Communist Party's top leadership meeting later this month for signs of new stimulus. Li Daokui, a leading Chinese economist and adviser to senior leaders, warned that local governments have become bottlenecks rather than engines of growth. In a speech on Saturday, Li noted that fixed-asset investment—including infrastructure spending managed by provinces—declined by over 4% between January and May. He described the cumulative negative growth as "unprecedented" and urged attention to this issue alongside unemployment, stating that without action, all of China's economic goals would face difficulties.
External Pressures and Trade War Uncertainty
The US-China trade war remains in a detente phase, but Beijing fears a resumption of tariffs when the truce expires in November, which could hurt exporters. The global economy also faces strain from the US-Israel conflict with Iran, potentially reducing demand for Chinese goods. Although China's energy stockpiles have helped it weather the immediate shock, a global recession would cause long-term pain for its export-driven economy.
First-Half Growth Within Target
Overall growth for the first half of 2024 stood at 4.7%, within Beijing's target range, which may reduce pressure for large-scale intervention. However, economists say more extensive measures are needed to boost consumer spending and rebalance the economy.
