China’s GDP growth in 2022 Q2 was much weaker than the consensus expectations of economists polled by Reuters. The economy contracted by -2.6% on a quarter-on-quarter basis and expanded by just 0.4% over the latest twelve months, the second lowest reading since records of quarterly data began in 1992. On a sectoral basis year-on-year, manufacturing output fell by 0.3%, construction rose by 3.6%, and tertiary industry (which includes retail and wholesale sales, transport and services) contracted by 0.4%. In the latter, particular weakness was evident in real estate and in accommodation and catering trade. Looking at the trajectory of growth, April was the trough, with activity improving over May and June as virus-related restrictions were eased and as the economy benefited from policy stimulus. Going forward, even with solid growth in the second half of the year, the government’s growth target of ‘around 5.5%’ is looking unattainable. Fathom forecasts an expansion of just 2.8% over 2022 – the second weakest annual reading since the beginning of Deng Xiaoping’s policy of ‘Reform and Opening Up’.
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