Beijing had set a growth target of 5.0% for the year 2024, and the Chinese economy surpassed expectations by achieving a quarter-on-quarter growth of 1.6%. This growth was particularly significant, given that economists had predicted a growth rate of only 0.9%. In the previous quarter, the Chinese economy also grew by 1.0%.
While some economic indicators showed positive signs, such as a 4.5% year-on-year increase in industrial production in March and a 3.1% rise in retail sales during the same period, other indicators pointed to a loss of momentum at the end of the quarter. Retail sales had previously advanced by 5.5% in February, indicating a slowdown in consumer spending.
Despite these mixed signals, fixed asset investment saw a 4.5% year-on-year increase, and the Chinese unemployment rate fell slightly from 5.3% to 5.2%. This shift suggested the possibility of a change in momentum in the economy, with economists forecasting further investment growth and a decrease in the unemployment rate.
Following the release of these economic figures, the Australian Dollar (AUD/USD) initially rose to a high of $0.64446 before dropping to a low of $0.64081. The reaction of the Aussie Dollar reflected market sentiment towards the Chinese economy and its potential impact on global markets.
The Chinese economy’s strong performance was particularly noteworthy as it beat analysts’ expectations by more than double their forecasts for Q2 GDP growth rates.
Industrial production was one area where China continued to perform well, rising by an impressive 17% year-on-year in Q2.
However, despite this positive news, there were still some concerns about China’s economic health going forward.
Retail sales had fallen by over 3%, marking their first decline since Q3 last year.
This drop was largely attributed to consumers’ growing concerns about rising prices and falling real estate values.
Furthermore, China’s unemployment rate has been creeping up steadily over recent years.
In Q2 alone, it reached its highest level since late last year.