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China’s GDP growth misses expectations in the second quarter

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While China’s exports surged by more than expected in June, imports climbed far less than anticipated. Workers pictured here disinfect a container ship terminal in Qingdao on July 13, 2022.
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BEIJING — China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls.

Analysts polled by Reuters had forecast growth of 1% in the second quarter.

Industrial production in June also missed expectations, rising by 3.9% from a year ago, versus the 4.1% forecast.

However, retail sales in June rose by 3.1%, recovering from a prior slump and beating expectations for no growth from the prior year. Major e-commerce companies held a promotional shopping festival in the middle of last month.

Fixed asset investment for the first half of the year came in above expectations, up 6.1% versus 6% predicted.

Unemployment across China’s 31 largest cities fell from pre-pandemic highs to 5.8% in June, but that for the age 16 to 24 category rose further to 19.3%.

In the second quarter, mainland China faced its worst Covid outbreak since the height of the pandemic in early 2020. Strict stay home orders hit the metropolis of Shanghai for about two months, while travel restrictions contributed to supply chain disruptions.

By early June, Shanghai, Beijing and other parts of China were on their way to resuming normal business activity. In the last few weeks, the central government has cut quarantine times and eased some Covid prevention measures.

But different parts of China have had to reinstate Covid controls as new cases spike.

As of Monday, Nomura said regions that account for 25.5% of China’s GDP were under some form of lockdown or heightened control. That’s up from 14.9% a week earlier.

Major investment banks have repeatedly cut their full-year China GDP targets due to the impact of Covid controls. Among firms tracked by CNBC, the median forecast was 3.4% as of late June.

The official GDP target of “around 5.5%” was announced in early March.

This is breaking news. Please check back for updates.

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