China records a decline in GDP for the second quarter, another record for youth unemployment

BEIJING – China said on Monday that its second-quarter gross domestic product grew 6.3% from a year ago, missing expectations.

The unemployment rate for youth ages 16-24 reached 21.3% in June, a new record.

The 6.3% qoq GDP growth pace was 0.8% from the first quarter, slower than the 2.2% qoq pace recorded in the first three months of the year. Analysts polled by Reuters had expected a 7.3 percent increase in gross domestic product for the second quarter.

Retail sales for June rose 3.1%, slightly below expectations of 3.2%. Within retail sales, sales of restaurant, sports and leisure products along with alcohol and tobacco rose the most. Automotive, office products and everyday goods saw sales decline in June from a year ago. Online sales of physical goods grew 6.7% in June compared to a year ago, slower than in May, according to CNBC’s calculations of official data accessed via Wind Information.

Industrial production for June rose 4.4% from a year ago, better than the forecast of 2.7%.

Fixed asset investment for the first half of the year increased by 3.8%, better than expected by 3.5%.

The urban unemployment rate was 5.2% in June.

China ended its control of Covid-19 in December. The initial economic recovery has lost steam. The huge real estate sector has struggled to recover, while exports have slumped due to lower global demand.

Within China, weak consumer demand meant no change in prices in June. The People’s Bank of China said last week that it expects a decline in July, but expected inflation to pick up later this year.

Domestic travel was a bright spot in the recovery. Urban residents more than doubled their tourism spending in the first half of the year compared to last year, to 1.98 trillion yuan ($280 billion), according to the Ministry of Culture and Tourism. However, she said, rural residents’ spending on travel rose only 40% over that period.

The combined first-half total of 2.3 trillion yuan was lower than the 2.78 trillion yuan reported in the first six months of 2019, before the pandemic, official data showed.

Beijing said last week it would extend property subsidy measures. The authorities also announced large-scale export subsidies. The country has also expanded tax breaks for purchases of electric cars, a growing industry the government is keen to support.

But Beijing has shown a reluctance to embark on greater stimulus, especially as local government debt has soared. An expected Politburo meeting later this month could provide more details on economic policy.

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