Government data shows gross domestic product growth slowed in the second quarter from earlier in the year, even though it rose over the same period in 2022.
The News
China’s economy slowed markedly in the spring from earlier in the year, official numbers released on Monday showed, as exports tumbled, a real estate slump deepened and some debt-ridden local governments had to cut spending after running low on money.
The new gross domestic product data for the second quarter — from April through June — underlined what has been apparent for weeks: China’s recovery after abandoning its extensive “zero Covid” measures will be harder to achieve than Beijing and many analysts had hoped.The Numbers
Covid not only still hangs over China’s economy; it also skews some of its official data. The main G.D.P. number reported by Beijing on Monday, comparing this year with the same quarter last year, showed that the economy expanded 6.3 percent. But that reflected improvement from a sharp slowdown in 2022’s second quarter, a period when China’s largest city, Shanghai, was in a two-month lockdown.
Because of the huge impact of the closure of Shanghai, which has 25 million people, comparing this spring and last spring provides “a misleading picture of China’s economic performance,” said Diana Choyleva, the chief economist at Enodo Economics in London.
Instead, analysts said, a more accurate measure of the economy emerges by comparing the second quarter of 2023 with the previous three months, after the “zero Covid” policy was scrapped.
And by that measure, output was only 0.8 percent higher in the second quarter than the first quarter. When projected out for an entire year, that is a growth rate of a little over 3 percent a year, down from about 9 percent in the first quarter.
China’s economy is flashing many warning signs.
Exports plunged, particularly in June. Weak spending is pushing China close to a dangerous trend known as deflation: Consumer prices are flat, and wholesale prices paid by companies are actually falling.
