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China’s economy grew 5.2 per cent year on year in the second quarter as resilience in exports helped to offset sluggish domestic demand in the world’s second-largest economy.
The growth rate, which slightly exceeded the 5.1 per cent average estimate from analysts polled by Reuters but trailed the 5.4 per cent growth in the first quarter, positions Beijing to hit its full-year target of about 5 per cent.
China’s President Xi Jinping, who needs robust exports and manufacturing to offset a property slowdown that has weakened domestic demand, faces a crucial moment in the coming weeks as Beijing hammers out a final trade deal with the US.
The biggest challenge in the second half “lies in the uncertainty surrounding US trade policy, which could weigh on China’s net export contribution”, said Arindam Chakraborty, an economist from ANZ, in a note ahead of the release of the GDP figure.
“Nevertheless, policymakers are likely to finetune countercyclical measures to target 5 per cent annual growth in 2025.”
On Monday, China reported strong second quarter trade figures after a truce in the trade war enabled producers to ship more goods abroad.
But the US is seeking to tighten a noose around China’s exports by imposing high tariffs on transshipments, or rerouting of Chinese to America through third countries such as Vietnam.
Beijing’s export and manufacturing-driven growth model is beginning to face problems at home with Communist party media criticising industrial overcapacity for driving a vicious price war in the domestic market
“Stronger-than-expected export performance is proving to be a key support to Chinese growth even as momentum slows into the second quarter,” JPMorgan analysts wrote in a note.
