by Kevin Yao and Joe Cash

BEIJING (Reuters) – China’s economic growth slowed in the second quarter, official data showed on Monday, as a prolonged property crisis and a weak job market weighed on domestic demand, fueling expectations that Beijing will roll out additional support measures.

China’s gross domestic product (GDP) grew at an annual rate of 4.7 percent in the April-June period, according to data released by the National Bureau of Statistics (NBS) on Monday, while analysts polled by Reuters had expected growth of 5.1 percent after rising 5.3 percent in the first quarter.

“Overall, these disappointing data show that the path to achieving the 5% growth target remains challenging,” commented Lynn Song, chief Asia economist at ING.

“The negative effect caused by the fall in the real estate market and stock market shares (…) is causing consumption to plummet,” he added, noting a refocusing on less expensive goods and activities.

On a quarterly basis, Chinese GDP grew by 0.7% over the April-June period, while the consensus was +1.1% after +1.5% in revised data in the first quarter.

The publication of these statistics comes as the third plenum of the political bureau of the ruling Communist Party (CCP) opens this Monday.

Beijing, which is seeking to boost confidence, could take this opportunity to decide on additional support measures for the economy, even if politicians must also take into account the dizzying debts that are accumulating.

The government has set itself the goal of achieving growth of around 5% this year, a target that many analysts consider very ambitious and likely requiring more support measures.

Separate data released Monday showed industrial production rose 5.3% year-on-year in June, above the consensus of 5.0%.

But retail sales slowed to their weakest level since December 2022, when Beijing lifted strict lockdown measures in place to combat the COVID health crisis, illustrating the fragility of consumption.

They rose by 2% in June over a year. Analysts had expected an increase of 3.3% on average.

“Among all the data released today, what stands out is the weakness in retail sales,” said Xing Zhaopeng, senior strategist at ANZ.

“Household consumption remains very weak (…) while employers are cutting wages and youth unemployment is high. Households will continue to be cautious.”

(Kevin Yao and Joe Cash; Jean Terzian)

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