China’s GDP for Q2 2021 came out at 7.9% vs. 8% expected. Despite missing expectations, the Chinese economic growth remains impressive as it recovers from the pandemic.
One of the most expected pieces of economic data from Asia is the Chinese economic growth, as reflected by the Gross Domestic Product. In the second quarter, the Chinese economy grew by 7.9%, missing expectations of 8%.
However, this is solid growth as shown by a detailed look at the numbers for the second quarter. For instance, retail sales have beaten expectations, up 12.1% in June from a year ago.
Moreover, industrial production rose by 8.3% vs. 7.8% YoY. Furthermore, fixed asset investments exceeded expectations, too. This is spending in non-rural capital investments and provides an early signal of future economic activity.
Retail Sales Fueled Economic Growth
The higher retail sales number shows that the Chinese consumer is not reluctant to spend. Beverages were the fastest-growing category, up 29.1% YoY. What is interesting is that the retail sales numbers have missed the analysts’ expectations for the first two months of the second quarter, thus the bias for this week’s release was tilted to the downside.
The surge in commodity prices remains a problem for the Chinese economy. Because it is a huge importer of raw materials and commodities from around the world, the rising prices during the pandemic had a negative impact on the Chinese GDP.
As such, the Chinese authorities have announced support for businesses affected by higher commodity prices. It may come as a surprise for a state-dominated economy, but the Chinese GDP depends a lot on privately run businesses as they have a large contribution to tax revenue and jobs.
All in all, steady growth for the Chinese economy continued in the second quarter. If commodity prices cool down in the second half of the year, the economic growth should accelerate.