Status: 07/15/2021 10:39 a.m.
The growth of the Chinese economy is losing momentum, as the current data for the second quarter show: Rising raw material prices and the flare-up pandemic are slowing down.
After a record start to the year, China’s economic growth slowed somewhat in the second quarter. The second largest economy behind the USA grew from April to June year-on-year by 7.9 percent, according to the Beijing statistics office. Experts had expected an increase of 8.1 percent. For comparison: The Federal Ministry of Economics is expecting growth of 3.5 percent for Germany in the current year.
“In general, the economy has steadily recovered in the first half of the year,” said the statistical office’s announcement, which warned of uncertainties at the same time. The unpredictable development of the pandemic, which is on the rise internationally, was named as a risk. Outbreaks in other parts of the world could quickly affect China’s trade.
Low comparative value
In the first quarter, the economy grew by a record 18.3 percent year-on-year. The unusually large increase was explained at the time by the fact that the economy had collapsed sharply in spring 2020 due to the Corona crisis, which means that the comparative value was low. Now, according to experts, growth is about to return to the pre-pandemic long-term trend. All in all, growth in the first half of the year was 12.7 percent. “It was to be feared that after this special demand subsided, the economy would stutter,” explains economist Thomas Gitzel from Liechtenstein’s VP Bank.
The World Bank recently estimated that the Chinese economy could grow by 8.5 percent for the year as a whole. Both consumer and business confidence have recently continued to improve, which is why better labor market conditions and rising domestic demand can be assumed. According to the forecast, China’s exports should also develop well. The Chinese government is more cautious and set its official growth target in the spring of “over six percent”.
The German economy benefits
Other data presented on Thursday also showed a largely stable development. Industrial production, a measure of activity in the manufacturing sector, rose 8.3 percent in June year-on-year. Retail sales rose 12.1 percent. Both values were above expectations.
German corporations are also benefiting from the recovery in the Chinese economy. Many companies that are active in China have enjoyed lavish profits over the past six months. According to a survey published by the EU Chamber of Commerce in June, the companies benefited from the fact that China was able to overcome the pandemic faster than other regions of the world and that the economy picked up speed again last year.