Gross domestic product expanded 7.9% from a year earlier, the National Bureau of Statistics said Thursday, down from 18.3% in the previous quarter and compared with a median forecast of 8% in a Bloomberg survey of economists. On a two-year average growth basis, which strips out the effect of last year’s pandemic, the economy grew 5.5% last quarter, higher than 5% in the previous three months.
The recovery has shown signs of plateauing in recent months after a sharp V-shaped rebound driven by industrial output and exports. Consumers had remained cautious after incomes took a knock during the pandemic and sporadic virus outbreaks more recently restricted travel and spending. The June pickup in retail sales may fuel optimism that the recovery is becoming more balanced.
China s more balanced recovery gives support to global rebound
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Foreign currency deposits in Chinese banks surpass $1T
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Chinese banks’ stockpile of foreign-currency deposits has surpassed $1 trillion for the first time, creating an opportunity for Beijing to allow greater freedom for capital to flow out of the country. The pool has been growing as surging demand for Chinese goods during the pandemic has beefed up foreign earnings of exporters, while the resilient economy and strengthening currency have lured overseas investors to sell dollars for yuan to buy Chinese stocks and bonds. Bank deposits in foreign currencies jumped more than $260 billion in the year through May, the most in data starting in 2002. Then a mismatch sets in: despite the increase in inflows, Chinese banks don’t have many channels to utilize their foreign exchange. One way is to sell it onshore, but that adds pressure for the yuan to strengthen. The currency is already trading near a five-year high against a basket of its peers adding urgency for Beijing to reform its foreign-exchange market and ease capital controls,