China’s Economic Slowdown Deepens in Q2 2024
China’s economy expanded at its slowest pace in a year during the second quarter of 2024, growing just 4.7% year-on-year—down from 5.3% in Q1. The National Bureau of Statistics (NBS) data highlights mounting pressures from the US-China trade war and sluggish consumer activity, raising concerns about Beijing’s ability to sustain its post-pandemic recovery.
Trade War Drags on Exports and Growth
Escalating US tariffs on Chinese EVs, semiconductors, and other goods have disrupted supply chains and weakened investor confidence. June exports grew just 3.6%, a sharp drop from May’s 7.6% surge, while imports shrank for the fourth straight month.
“The trade war is clearly biting,” said Rajiv Bhatia, senior economist at Gateway House. “China’s export-driven model is under severe pressure.”
Domestic Challenges: Property Crisis and Weak Spending
China’s property sector, once a key GDP driver, remains in crisis despite government stimulus. Retail sales grew a mere 2.3% in June, missing forecasts, while youth unemployment stayed high at 14.2%.
“The Chinese consumer isn’t spending, and that’s a big problem,” noted Nomura economist Priya Menon.
Is Beijing’s Stimulus Enough?
Policymakers have cut interest rates and introduced EV subsidies, but analysts argue these measures fall short. “China needs bold reforms to restore confidence,” said former Indian economic adviser Arvind Subramanian.
Global Ripple Effects
A weaker Chinese economy threatens commodity demand, impacting exporters like Australia and Brazil. For India, risks to trade are balanced by potential gains in manufacturing investment.
Outlook: Tough Choices Ahead
With US-China tensions unlikely to ease before the US election, economists warn full-year growth could dip below 4.5%. “The next six months are critical,” Bhatia emphasized.
Will Beijing ramp up stimulus or pivot to sustainable growth? The decision could reshape global markets.
