China Q2 GDP growth slows to 27-year low of 6.2% from Q1 6.4%

17, Jul. 2019

TOKYO, NNA - China's economy grew 6.2 percent in the second quarter from a year earlier, the slowest in 27 years, due to weaker domestic and external demand amid the U.S. trade dispute, according to official data.

The National Bureau of Statistics of China (NBS) said Monday that the Q2 gross domestic product reading was the lowest since the first quarter of 1992, when China began compiling the data.

Beijing is expected to support growth with fiscal spending, while the People's Bank of China, the central bank, has lowered the ratio of cash banks must hold in reserve six times since early 2018.

Key Points:

―― The Q2 GDP growth followed rises of 6.4 percent in Q1, 6.4 percent in 2018 Q4, 6.5 percent in Q3 and 6.7 percent in Q2. In Q2, primary industry expanded 3.3 percent from a year earlier, secondary industry increased 5.6 percent and tertiary industry grew 7.0 percent.

―― In the first half of 2019, GDP gained 6.3 percent from the same period a year earlier.

―― Other indicators showed the effects of past policy might be emerging. Industrial output increased 6.3 percent on year in June and retail sales surged 9.8 percent, both higher than expected.

―― In the January-June period, industrial output rose 6.0 percent from a year earlier, slower than the 6.5 percent rise in January-March, while fixed-asset investment increased 5.8 percent, also slowing from a 6.3 percent rise in the first three months of the year. Real-estate investment grew 10.9 percent in the January-June half after an 11.8 percent rise in the first quarter.

Takeaway:

―― Beijing is confident it will achieve the 2019 growth target range of 6.0 percent to 6.5 percent, thanks to past economic stimulus measures, an NBS spokesman told reporters. But he said growth could slow further in the second half of the year as the government seeks higher quality economic activity, rather than just boosting the rate of growth.

―― Mihoko Hosokawa, an economist at Mizuho Bank, forecasts China's GDP growth will slow to 6.2 percent this year and 6.1 percent next year, as the government tries to guide the economy to more sustainable growth. But she added that there are still good business opportunities for Japanese companies, “given the fact that the Chinese economy is still expanding by the size of the Indonesian economy every year and that consumers are demanding more value-added products and services.”