China's economic growth slowed down in July, with several key indicators, including retail sales and industrial production, falling short of market expectations, underscoring the multiple constraints the economy faces – ranging from the sudden Covid-19 delta variant outbreak and floods, to a spike in bulk commodity prices and flattening overseas demand. The Chinese government noted that since the second half of July, the country has been confronted with extreme weather-induced floods and Covid-19 flare-ups across many provinces, compounded by volatility in major commodity prices and a complicated international economic context. While the fallout of clustered coronavirus infections is likely to continue to weigh on the August economic performance, the second half of 2021 will see China's economic recovery momentum continue to pick up, analysts said. For the full year, China remains firmly on track to achieve an over 8% growth, well above the official target of above 6%.
In July, retail sales grew 8.5% year-on-year to CNY3.49 trillion, the National Bureau of Statistics (NBS) said, compared with a 12.1% surge in June. Fixed-asset investment (FAI) rose 10.3% year-on-year in the first seven months to CNY30.25 trillion, slightly down from 12.6% in the January-June period. Industrial output posted a 6.4% gain year-on-year in July, down from the 8.3% rally in June. NBS Spokesperson Fu Linghui said that China's economy sustained its steady recovery momentum in July and major economic readings remained within a reasonable range, adding that the recovery is still unstable and uneven. He predicted that after high-speed growth in the beginning of the year, China's GDP growth will gradually slow down throughout the year.
“There was an obvious moderation of growth in July due to the larger base last year and easing marginal effect of main economic drivers, which show that China's economy is transiting from a rapid stage of recovery to a more modest rebound,” Hu Qimu, Chief Research Fellow at the Sinosteel Economic Research Institute, told the Global Times. Investment in high-tech industries is seeing signs of a ramped-up recovery. In July, it jumped 20.7% year-on-year. In particular, investment in high-tech manufacturing and high-tech services rose 27.1% and 8.8%, respectively.
