China's economy expanded at a slower-than-forecast 4.7 percent annual rate in the second quarter of this year, the government reported on Monday, while emphasising signs of improvement in factory output, income and investment.

Second-quarter growth was below the 5.3 percent seen in the first quarter of 2024.

Economists said weak consumer demand and reduced government spending were dragging on growth in the world's No. 2 economy.

For the first six months of 2024, the economy expanded by five percent, in line with the country's growth forecast for the entire year.

China's retail sales slowed to two percent growth in June, official data showed, suggesting continued struggles to boost consumption.

"In June, the total retail sales of consumer goods went up by 2.0 percent year on year," the National Bureau of Statistics (NBS) said. May's figure was 3.7 percent.

Retail sales were up 3.7 percent year on year in the first half of the year.

Industrial output, meanwhile, climbed 5.3 percent year on year last month, and rose 6 percent for the six months ending June.

The urban unemployment rate stood at 5.1 percent in the first half of 2024, down from 5.3 percent from the same period a year ago.

The NBS attributed the weaker second-quarter GDP growth to short-term factors such as extreme weather and floods, but said it also reflected rising challenges, especially from insufficient effective demand and unsmooth economic flow at home.

"Overall, the national economy has continued to improve in the first half in a stable manner," the NBS said in a statement, citing support from policy incentives, rebound in external demand and development of new quality productive forces.

Raymond Yeung, a chief Greater China economist at ANZ Bank, told RTHK that weak retail sales dragged down GDP growth in the second quarter.

"That's also very consistent with our on-the-ground observations in different cities in China. Of course you don't notice that when Hong Kong people go to Shenzhen. But in other cities, which is clearly more domestic, the consumption level is clearly weak."

The release of the latest economic figures came as leaders of the Communist Party gathered for a once-a-decade conclave to set economic policy that was expected to focus on self-sufficient strategies for growth in an era of tensions over trade and technology.

The four-day meeting of the Communist Party’s 205-member Central Committee is the third plenary session of a five-year term that started in 2022.

According to Xinhua News Agency, President and party general secretary Xi Jinping delivered a work report on behalf of the Politburo at the start of the third plenum and expounded on a draft decision on further comprehensively deepening reform and advancing Chinese modernisation.

Such meetings typically focus on long-term issues, but business owners and investors are watching to see if the party announces any immediate measures to try to counter a prolonged downturn in the property market and boost the country's post-pandemic recovery.

Yeung said the third plenary session has to focus on stabilising employment, noting reports of layoffs and salary cuts in the private sector.

"Ultimately, what we need is to have a stable labour market and stable employment so that households will be more confident in spending. And that wage dynamic is the most important area the policymakers really need to focus on in the future," he said. (RTHK/Agencies)
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Last updated: 2024-07-15 HKT 17:05