China’s Economic Slowdown Mitigated by the Growth in Finance and IT Sectors

China’s Economic Slowdown Mitigated by the Growth in Finance and IT Sectors

In the second quarter of 2019, China’s economic growth slowed down to 6.2%. This is the slowest pace in the last 27 years, and it is mainly due to the trade situation with the US. Despite the fact that there was a slight improvement in June, most experts believe that the gains may not be able to stabilize. As a result, Beijing will have to take some drastic measures to bring its economic growth back on track.

Compared to the first quarter’s growth of 6.4%, the momentum has considerably slowed down. This means that Beijing needs to go a long way before it is able to increase the consumption and investment and restore business confidence. According to analysts, the April-June pace has been the slowest since the first quarter of the year 1992.

According to the economist Nie Wen, China’s economic pace might slow down to 6-6.1% in the second half of this year. It will be the lower end of China’s expected 2019 target of 6-6.5%. Up till now, the economy has been slow in responding to the drop in economic pace. The pressure has intensified even more after Washington raised the tariffs on Chinese goods two months ago.

On the bright side, China’s economic slowdown has been mitigated with growth in the country’s finance and IT sectors. According to statistics, China’s finance output has grown by 7.6% from what it was a year ago. Interestingly, it is higher than what it had been in the past 3 months. The growth in China’s IT sector has been slowed down to 20.1%, which is slowest in two years. Yet, it is more than the 6.2% growth in the entire GDP. The sector-wise breakdowns were released in a report that was published on Tuesday, after the announcement of the main data on Monday.

The overall gross domestic product (GDP) has slowed down since the first quarter. However, the data shows a considerable increase in retail sales and industrial output in the month of June. These services constitute for more than half of China’s output and have managed to maintain a steady growth of 7%. As far as the primary industry is concerned, it has expanded by 3.3%. In contrast, secondary industries that make up for construction and manufacturing slowed down to 5.6%.

Despite the growth in finance and IT sectors, China is far behind on the economic front. In order to regains its economic prosperity, Beijing will have to come up with new and creative measures.