Growth stagnates in Q2 in China – The heavy blow to the economy of the Asian giant

THE China saw its economy grow in the second quarter to just 0.4%, as restrictive measures to stem the pandemic of the new coronavirus and the real estate crisis took a heavy toll on activity, according to official data released today.

Although generally viewed with caution, government data on China’s GDP trajectory is always closely watched, given its weight in the global economy.

A slowdown in China’s economy was widely expected, although a group of analysts polled by Agence France-Presse estimated it would be much more moderate (that growth would slow to 1.6%).

In the first quarter of 2022, the GDP growth rate was reported to be 4.8% on an annual basis.

Since 2020, Beijing has implemented a policy of “zero cases” of the novel coronavirus, which consists of imposing targeted lockdowns, mass testing, quarantine of those infected and travel bans.

In the spring, the Chinese financial capital, Shanghai was put on lockdown for two months as it experienced its worst outbreak in two years.

A similar blockade was imposed for a time in Beijing, the capital and heart of political power.

But these measures dealt a heavy blow to the economy, as many businesses, factories and shops were forced to shut down and supply chains were severely strained.as reported by the AFP and relayed by the Athens News Agency.

However, in June, retail sales, the main indicator of household spending, rebounded sharply (+3.1% year-on-year), after contracting for the third consecutive month in May (-6.7%).

For its part, industrial production registered last month an increase of 3.9% on an annual basis, after its unexpected and marginal increase (+0.7%) in May.

As for unemployment, it fell to 5.5% in July, from 5.9% in May.

This index, which is closely monitored by the government – although analysts consider it fictitious, since it concerns only urban residents -, had reached its absolute record (6.2%) in February 2020, at the peak of the pandemic , before retreating.

The slowdown in the Chinese economy comes in a politically sensitive year for China as – barring a cataclysm – Xi Jinping is expected to be re-elected to the leadership of the Communist Party and the presidency in the fall.

In 2021, the Asian giant, emerging from the first wave of the pandemic, registered 8.1% GDP growth.