China’s economy grew by 0.4% in the second quarter of 2023, the slowest pace of growth in over two years. The slowdown is due to a number of factors, including the ongoing COVID-19 pandemic and the war in Ukraine.
The pandemic has disrupted supply chains and dampened demand, while the war in Ukraine has pushed up energy prices and disrupted trade. The Chinese government has also imposed strict lockdowns in several cities in an effort to contain the spread of the virus, which has further weighed on economic activity.
The slowdown is a major setback for China, which had been aiming to achieve GDP growth of around 5.5% in 2023. The government is expected to take measures to boost the economy, but it is unclear how effective these measures will be.
Here are some of the key sectors that have been affected by the slowdown:
- Manufacturing: Manufacturing activity contracted for the third consecutive month in June, as export orders slowed and domestic demand weakened.
- Retail: Retail sales growth slowed to 3.1% in June, the weakest pace since March 2020.
- Investment: Fixed-asset investment growth slowed to 6.1% in the first half of the year, the weakest pace since 2016.
- Exports: Exports growth slowed to 13.2% in June, the weakest pace since March 2020.
- Imports: Imports growth slowed to 4.8% in June, the weakest pace since February 2020.
The slowdown is likely to have a knock-on effect on other countries, as China is a major trading partner for many economies. The International Monetary Fund has downgraded its growth forecast for China to 4.4% in 2023, down from 8.1% in 2022.
The Chinese government is expected to take measures to boost the economy, such as increasing infrastructure spending and cutting interest rates. However, it is unclear how effective these measures will be. The slowdown is a major challenge for the Chinese government, and it remains to be seen how the economy will fare in the coming months.