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Stock market: the Chinese recovery threatened

Stock market: the Chinese recovery threatened

In the Middle Kingdom, the recovery appears to be in jeopardy as a slowdown in the economy is felt in the second quarter.

 

In China, data for the April-June quarter showed that gross domestic product (GDP) grew by 7.9% compared to last year’s figures. This was lower than analysts’ predictions, as reported by Reuters, who estimated an increase of 8.1%.

 

In the period January-March, a significant growth amounting to 18.3% has lifted China, a growth however induced by the collapse of the first quarter of 2020 caused by the beginnings of the pandemic.

 

Retail sales and the industrial sector grew more slowly in the month of June, due to a sharp decline in the production of motor vehicles, while the NBS data also showed a downturn in the Chinese real estate market, a key sector for growth.

 

The numbers are slightly below our expectations and the market’s expectations (but) I think the momentum is quite strong,” said Woei Chen Ho, an economist at UOB in Singapore interviewed by Reuters.

 

Our biggest concern is the uneven recovery we’ve seen so far and for China, the recovery in domestic consumption is very important. Retail sales this month have been quite strong and that may ease some concerns,” he added.

 

A loss of momentum thus jeopardizes the Middle Kingdom‘s economic recovery, which is linked to a decline in consumer spending. Consumer spending has fallen in recent months due to rising raw material costs, supply shortages and pollution controls that are weighing on industrial activity.

 

According to the National Bureau of Statistics, average second quarter growth in 2020 and 2021 was 5.5%, up slightly from the 5% average in the first quarter data.

See Also

 

Regarding GDP, the NBS said GDP grew 1.3 percent in the April-June period, beating the Reuters poll forecast of a 1.2 percent increase. China’s National Bureau of Statistics lowered its estimate and forecast first-quarter growth from the fourth quarter of last year to 0.4%.

 

Read also > ASIAN MARKET RECOVERS

 

 

Featured photo: © Press

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