PRC Economy Grew at Slower Rate of 4.7% in Q2 2024

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Facts

  • China, the world’s second-largest economy, expanded 4.7% in Q2 of 2024 — far slower than economists forecasted and the 5.3% growth in January-March of this year.1
  • Figures released by China’s National Bureau of Statistics on Monday showed the economy missing the 5.1% growth expectation reportedly set by a Reuters poll.2
  • The Bureau cited sluggish global economic growth, persistent inflation, global conflicts, and weak domestic demand, among others, as reasons for the slump.3
  • China's real estate sector reportedly continued to contract as sales and investment shrank in the first half. Retail sales growth, too, remained weak at 2%.4
  • Economists said falling property and stock prices, low wage growth, and industry-wide cost-cutting shifted spending from major purchases to bare necessities.5
  • China's latest numbers came ahead of the Third Plenum — Monday's 4-day Communist Party conclave in Beijing, expected to set the country's economic agenda.6

Sources: 1Guardian, 2CNBC, 3Associated Press, 4Bloomberg, 5Reuters and 6New York Times.

Narratives

  • Pro-China narrative, as provided by South China Morning Post. Despite recent alarms about China's economy, there's no need for panic. While China's growth has historically been investment-driven, domestic consumption now leads, contributing massively to GDP growth last year. Consumption of goods in China remains higher as a share of GDP than in the US. Additionally, Chinese households have high homeownership rates, too. China's economic outlook remains stable, with proactive measures in place to support continued growth.
  • Anti-China narrative, as provided by New York Times. China's latest economic statistics should concern the world. Years of erratic policies and strict Communist Party control have weakened domestic demand and slowed growth. The real estate market is failing, local governments are in debt, and unemployment is high. With limited policy options, China leans on increasing industrial capacity, risking greater economic instability. This signals the end of China's 'reform and opening' era.

Predictions