DChinese economic growth accelerated in the second quarter, but fell short of expectations. Compared to the same period last year, the economy grew by 6.3 percent, as the national statistics authority announced on Monday. The economy has shown a “good momentum of recovery,” it said. Analysts had expected a more robust 7.1 percent increase. In the first quarter, the gross domestic product (GDP) of the second largest economy rose by 4.5 percent.
The retail trade, the most important indicator of consumer behavior, increased in June by only 3.1 percent compared to the same month last year, as the statistics authority further announced. This means a significant decrease compared to May, when an increase of 12.7 percent was recorded. Industrial production grew 4.4 percent year-on-year, after 3.5 percent in May.
Youth unemployment reached a new high: among 16 to 24 year olds it rose to 21.3 percent. In May it was 20.8 percent.
Debate on new China strategy
The federal government presented a new China strategy last week, which also affects economic relations with Asia’s second largest economy. Chancellor Olaf Scholz calmed the concerns of the economy that many new requirements for companies will follow. “Companies in Germany have long been acting in accordance with what we have now described here,” Scholz said on Friday in Berlin about the document approved by the cabinet on Thursday. “Many will continue to invest heavily in China, will export to China and will also purchase goods from China.” But at the same time, they would also seize opportunities to invest and build supply chains in other countries. The federal government considers this important in order to reduce and diversify dependencies and risks in China business.
The tone of the Chancellor (SPD) differs from that of Foreign Minister Annalena Baerbock (Greens). This criticized on Thursday that some companies had not yet understood that they had to reorient themselves. Economics Minister Robert Habeck (Greens) wants to present proposals as to how the “internalization” of costs from a cluster risk at companies, as required by the strategy, could look like.
Scholz dampened the expectation that a wide-ranging state examination of investments by German companies abroad should now be expected. This is not planned, contradicts the German economic model and would overwhelm the state. In the question of military and general security, however, one wants to take a closer look. The background is the debate as to whether and in what form German companies should have investments in China approved. In the federal government’s China strategy itself, no clear statement is made on this.
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