China Maintains Economic Growth Momentum Despite Slowdown in Some Sectors

The Chinese economy continued its growth trajectory in the second quarter of the current year, recording an increase in GDP by 5.2%, according to the National Bureau of Statistics. Despite surpassing analysts' expectations of 5.1%, this figure shows a slowdown compared to the growth rate of 5.4% recorded in the first quarter.

Industrial production showed strong performance with a growth of 6.8%, exceeding expectations, while the growth rate of retail sales declined to 4.8% in June compared to 6.4% in May, partly due to the weak performance of the restaurant and beverage sector, which saw growth of only 0.9%, the lowest since December 2022.

On the other hand, investment in fixed assets showed modest growth of 2.8%, below expectations, while real estate investment worsened to 11.2% in the first half of the year.

Ning Jizhe, Deputy Commissioner of the National Bureau of Statistics, emphasized that domestic consumption was the main driver of growth in the first half of the year, accounting for about 52% of the GDP. He noted that the government is working to boost consumption spending by improving income levels, while the contribution of foreign trade decreased.

The real estate sector continues to struggle with a sharp decline, described by Ning as being in a "search for the bottom," necessitating further government support. Economists also warned of contraction risks due to price reduction policies affecting profit margins.

In a related context, China continues its trade negotiations with the United States before the deadline set for August 12. Beijing had previously announced a stimulus package in response to US tariff hikes, including support for exporters and job creation.

US officials are expected to meet with their Chinese counterparts soon to discuss outstanding issues, according to US Treasury Secretary Steven Mnuchin.

Despite the challenges, Chinese officials expect a gradual improvement in consumer prices in the second half of the year. Reports also suggest that Beijing may introduce more financial incentives if economic pressures persist, especially amid declining domestic demand indicators.