China’s quarter-on-quarter and year-on-year GDP is below consensus, +0.7% vs. +1.1% vs., +4.7% vs. +5.1% vs. (Bloomberg).
Here are the quarterly rates (not annualized):
Source: NBS via TradingEconomics.com.
From Bloomberg:
Gross domestic product expanded 4.7% in the second quarter from a year earlier, below all but one of 28 estimates in a Bloomberg survey of economists. Retail sales rose at the slowest monthly pace since December 2022, showing that government efforts to boost confidence have failed to reinvigorate the Chinese consumer.
Here are some additional series photos:
Source: Bloomberg.
Recently, at a WEF event (also called “Summer Davos”), Premier Li Qiang said no shock treatment would be administered (FT):
In the aftermath of the pandemic, China’s economy was like a patient recovering from a serious illness, Li said. “According to Chinese medical theory, we cannot use strong medicine at present. We need to fine-tune and slowly nourish (the economy), allowing the body to gradually recover.”
Natixis invites us not to focus on short-term fluctuations, but on the downward trend in growth and inflation, with nominal GDP growth year-on-year of +4% (vs. +4.7% in real terms). Note that the June CPI decreased by 0.2% month-on-month.
Personally, I doubt the efficacy of “Chinese medicine,” if by that term we mean traditional herbs and roots (and other things we don’t want to hear about too much) used in the past. I would say that strong medicine is needed, although my definition of strong medicine probably differs from that put forward by the CCP leadership. My definition includes a move away from the increasingly dirigiste and state-enterprise-centric approach, so that political uncertainty is stabilized for an extended period.
Figure 1: Economic policy uncertainty in China (mainland newspapers) (blue line). ECRI peak-to-trough recession dates are shaded. Source: policyuncertainty.com via FRED, ECRI.
