China’s second-largest growth reflects economic restructuring ‘Business and Economic Issues

GDP grows 7.9 percent but higher prices for raw materials and technological challenges contribute to acceleration.

China’s economy grew at a slower pace than expected in the second quarter, according to the government, reducing manufacturing activity, rising commodity prices and the new proliferation of COVID-19 burdens the country.

Domestic gross domestic product (GDP) grew 7.9% in the April-June quarter since last year, government data showed Thursday, lowering expectations of an 8.1% increase in Reuters economists’ surveys.

Growth declined sharply from 18.3% growth in January-March, while annual growth rate was offset by a drop in COVID-19 early 2020.

Most of June’s sales have slowed since last month but met expectations.

“The figures were lower than what we expected and what the market expects (but) I think this trend is strong,” said UOB Woei Chen Ho, an economist in Singapore.

“Our concern is the inconsistent recovery we have seen so far and in China food recovery is very important … retail shopping this month was very strong and this could reduce stress.”

While the world’s second-largest economy has outgrown the burden of COVID-19, fueled by the need to export and support policy, much in recent months indicates temporary deterioration. The high cost of raw materials, lack of utilization and control of water pollution are a burden on the industry, while the small explosion of COVID-19 has kept a lid on consumer spending.

Advertisers are looking forward to a recent announcement from the central bank after People’s Bank of China said last week it would reduce the amount banks need to hold.

The move brought about 1 trillion Chinese yuan ($ 154.64bn) into the recovery plan.

Over every three months, commodity or GDP grew 1.3 percent in the April-June period, the National Bureau of Statistics (NBS) said, holding only a 1.2% increase in Reuters polls. The NBS also adjusted for first-quarter growth from the fourth quarter last year to 0.4 percent.

NBS data also shows that China’s industries grew by 8.3% in June since last year, down from an 8.8% rise in May. Economists on this study expect a 7.8% annual increase. Growth in sales increased by 12.1% since last year in June. The researchers expect the 11.0% increase to increase May 12.4%.

“Recovering domestic wealth is not the same,” said Liu Aihua, an NBS staff member at a fourth conference on Thursday.

“We also need to see that the global epidemic continues to evolve and there are some external challenges and uncertainties,” he said.

More information earlier this week shows that China’s exports have grown much faster than expected in June but a cultural analyst said the full growth of trade could be delayed by the second half of 2021, indicating uncertainty over the COVID-19 epidemic.

Economists in a Reuters survey expect GDP growth of 8.6% in 2021, which will be an annual growth rate in 10 years and more than the country’s target of more than 6%. China is the only economy that should have avoided a deal last year, up 2.3 percent.

Prime Minister Li Keqiang also said on Monday that China would not do as much good as a flood.

However, financial analysts at Reuters polls are expected to reconvene this year, also showing a decline in bank reserves (RRRs) in the fourth quarter.

Fixed inflation grew by 12.6% in the first six months from the same period last year, against a forecast of 12.1% and a decrease from the 15.4% jump from January to May.