China’s GDP growth slows to 7.9% in Q2 after strong economic recovery from COVID in Q1

China’s economic growth slowed to 7.9% in the second quarter year-on-year from a record growth the previous quarter, showing increasingly steady trends in the second-half year, the National Bureau of Statistics of China said on Thursday.

The gross domestic product (GDP) figure came in below the median forecast of 8.1%, polled by Reuters, and was lower than the 18.3% year-on-year increase in the first three months of 2021, which was boosted by the low base due to the pandemic.

“The country’s economy continues to recover steadily with production and demand picking up, employment and prices remaining stable,” said Liu Aihua, Director of the National Economic Comprehensive Statistics Department of the bureau, at today’s news conference.

She said market expectations were positive and major macro indicators were within the reasonable range. Industrial production increased 8.3% year-on-year in June, and 15.9% in the first half of the year compared to the same period last year. 

Retail sales rose 12.1% in June from a year earlier and grew by 23% in the January-June period.

Fixed-asset investment also grew 12.6% year-on-year in the first half of the year, and the jobless rate decreased 0.5% year-on-year to 5% this June, but Ms Liu predicted at the conference that the rate may increase as an estimated of 9.09 million university graduates would flood into the job market this year.

“The pandemic is not yet stable globally, and the recovery of the domestic economy is not yet even,” said Ms Liu at the conference, adding that China's economy would sustain a steady recovery in the second half of the year despite facing such difficulties.

She estimated that increasing domestic demands, enhancing market confidence, more policies to help small and medium-sized enterprises, and global economic recovery would further support the economic recovery.

The Chinese government announced several measures in the past few days to stabilize economic recovery, including lowering the bank reserve requirement ratio (RRR) from Thursday, and more support for SMEs.