China’s economic growth hit a two-year low in the second quarter, official data showed Friday, with Covid-19 lockdowns and an embattled property market nudging a government target further out of reach.
The world’s second-biggest economy grew 0.4 percent in the April to June period, the National Bureau of Statistics (NBS) said, piling pressure on the Communist Party’s leadership as it gears up for its 20th Congress, when President Xi Jinping is expected to be handed another five-year term.
The slowdown comes after China’s biggest city, Shanghai, was sealed off for two months as it battled a Covid resurgence, tangling supply chains and forcing factories to halt operations.
Beijing has dug its heels in on a zero-Covid policy of stamping out virus clusters as they emerge with snap lockdowns and long quarantines, but this has battered businesses and kept consumers jittery.
“Domestically, the impact of the epidemic is lingering,” the NBS said in a statement Friday, noting shrinking demand and disrupted supplies.
“The risk of stagflation in the world economy is rising” as well, the statement added, noting that external uncertainties are growing.
China has only logged a GDP contraction once in recent decades, and analysts expect the latest reading will drag full-year growth to about four percent, slashing earlier estimates.
Industrial production rose 3.9 percent on-year in June, up from 0.7 percent in May as Covid controls eased.
Retail sales picked up at 3.1 percent, after plummeting 6.7 percent in May. The urban unemployment rate was 5.5 percent, down from 5.9 percent in May, said the NBS.
Although there are signs that China’s economy has started to recover since Shanghai eased lockdown restrictions in June, analysts expect that pressure on consumption will likely persist.
