With COVID-19 curbs and an increasingly challenging international environment further dampening China’s economic growth forecast, investors at home and abroad are paying close attention to the country’s major economic indicators to gauge the effectiveness of its stimulus policies.
China H1 2022 economic indicators
On July 15, 2022, the National Statistical Bureau (NSB) released some key statistics for evaluating the economic performance of China in the first half of 2022.
At a quick glance, in the first half of 2022:
- China’s gross domestic product (GDP) grew by 2.5 percent year-on-year (YOY).
- The total value added of the industrial enterprises above the designated size grew by 3.4 percent YOY. In particular, the value added of high-tech manufacturing went up by 9.6 percent YOY.
- The value added of foreign invested enterprises went down by 2.1 percent.
- The value added of services went up by 1.8 percent YOY.
- The total retail sales of consumer goods went down by 0.7 percent.
- The investment in fixed assets (excluding rural households) was up by 6.1 percent YOY, while the investment in real estate development was down by 5.4 percent.
- Import and export of goods grew by 9.4 percent YOY.
- The consumer price index (CPI) went up by 1.7 percent YOY while the prices for industrial products (PPI) went up by 7.7 percent YOY.
In this article, we provide insights while discussing China’s performance on major economic indicators.
Key economic indicators in H1 2022
China’s national economy realized positive growth in the second quarter (Q2 2022) despite downward pressure, thanks to the strong stimulus policies implemented after major economic indicators plunged in April 2022.
According to the NBS, the GDP of China in the first half year was RMB 56,264.2 billion (US$8327.1 billion), up by 2.5 percent YOY at constant prices.
By industry, the value added of the primary industry was RMB 2,913.7 billion (US$431.2 billion), up by 5.0 percent year on year; the secondary industry was RMB 22,863.6 billion (US$3383.8 billion), up 3.2 percent YOY; and the tertiary industry RMB 30,486.8 billion (US$4512.0 billion), up by 1.8 percent YOY.
Specifically, the GDP for Q2 was RMB 29,246.4 billion (US$4328.4 billion), up by 0.4 percent YOY. By industry, in Q2 2022, the value added of the primary industry was RMB 1,818.3 billion (US$269.1 billion), up 4.4 percent YOY; the secondary industry was RMB 12,245.0 billion (US$812.2 billion), up 0.9 percent; and the tertiary industry RMB 15,183.1 billion (US$2247.0 billion), down by 0.4 percent.
|China GDP in H1 2022
||Amount (billion RMB)
|| YOY growth
|Total GDP in H1 2022
|China GDP in Q2 2022
||Amount (billion RMB)
|| YOY growth
|Total GDP in Q2 2022
In the first half year, the total value added of the industrial enterprises above the designated size grew by 3.4 percent YOY. In particular, the value added by high-tech manufacturing went up by 9.6 percent YOY.
In terms of ownership, the value added of the state-holding enterprises grew by 2.7 percent YOY, that of the share-holding enterprises up by 4.8 percent, and that of the enterprises funded by foreign investors and investors from Hong Kong, Macao, and Taiwan (FIEs) down by 2.1 percent, and that of private enterprises up by 4.0 percent.
|Added Value of Enterprises by Ownership
|State holding enterprises
In the second quarter, the total value added of the industrial enterprises above the designated size went up by 0.7 percent YOY. Specifically: a) in April, this went down by 2.9 percent year on year; b) in May, it shifted from negative to positive and was up by 0.7 percent; and c) in June, there was an increase of 3.9 percent.
In June, the Manufacturing Purchasing Managers’ Index stood at 50.2 percent, 0.6 percentage points higher than the previous month; the Production and Operation Expectation Index was 55.2 percent, 1.3 percentage points higher.
Service sector recovery
In Q2 2022, the value added of services was down by 0.4 percent YOY, but the downward trend was reversed in June, with the Index of Services Production in June shifting from a decline to an increase of 1.3 percent.
In the first half year, the value added of services went up by 1.8 percent YOY. Of this total, the modern service industries witnessed good momentum of growth. The value added of information transmission, software, and information technology services, and financial intermediation grew by 9.2 percent and 5.5 percent, respectively.
Retail sale of consumer goods
The total retail sale of consumer goods went down by 4.6 percent YOY in Q2 2022 and was down by 0.7 percent in the first half year, indicating a general weak consumption trend.
The total retail sale of consumer goods was down by 11.1 percent YOY in April. However, the declining trend eased in the following months. In May, the decline narrowed to 6.7 percent and in June, the total retail sale of consumer goods shifted from a decline to an increase of 3.1 percent YOY.
Investment in fixed assets
In the first half of the year, China continued to increase investment in fixed assets, especially in high-tech industries and social sectors.
In H1 2022, the investment in fixed assets (excluding rural households) reached RMB 27,143.0 billion (US$4017.2 billion), up by 6.1 percent YOY. Specifically, while the investment in infrastructure was up by 7.1 percent and manufacturing up by 10.4 percent, the investment in real estate development was down by 5.4 percent. This is not a surprise considering that real estate developers have struggled with debt issues amid a regulatory tightening since 2021.
By industry, the investment in high-tech industries grew by 20.2 percent, of which the investment in high-tech manufacturing and high-tech services increased by 23.8 percent and 12.6 percent, respectively. In terms of high-tech manufacturing, the investment in the manufacturing of electronic and communication equipment and in the manufacturing of medical equipment, measuring instruments, and meters grew by 28.8 percent and 28.0 percent, respectively. In terms of high-tech services, the investment in services for transformation of scientific and technological achievements and in research, development, and design services went up by 13.6 percent and 12.4 percent, respectively.
Import and export
In H1 2022, import and export of goods continued to grow, with the total value of goods trade at RMB 19,802.2 billion (US$2930.7 billion), showing an increase of 9.4 percent YOY.
The total value of exports was RMB 11,141.7 billion (US$ 1649.0 billion), up by 13.2 percent. The total value of imports was RMB 8,660.5 billion (US$1281.8 billion), up by 4.8 percent.
The CPI went up by 1.7 percent YOY in the first half of the year, which is pretty mild compared to other major economies. Nevertheless, the inflation in certain categories is worth noting, with the prices for transportation and communication going up by 6.3 percent, for fresh fruits up by 12.0 percent, and for fresh vegetables up 8.0 percent.
The PPI went up by 7.7 percent YOY, but the growth trend is easing. In April, the PPI grew by 8.0 percent YOY, but this number decreased to 6.4 percent and 6.1 percent in May and June, respectively.
How to read China’s H1 2022 economic data?
With China sticking to its ‘Zero-COVID’ policy, the country’s economy is combating significant downward pressure with multiple cities implementing some form of lockdown since March 2022, the most notorious of which was the nearly two-month lockdown in Shanghai. Such COVID-19 prevention and control measures have seriously disrupted production processes and distressed the supply chain. Other headwinds, such as the ongoing Russian-Ukraine conflict, have only exacerbated China’s economic vulnerabilities. Q2 2022 economic data saw a decline recorded on almost all major economic indicators, with April hitting China’s economy the worst.
Under these circumstances, the Chinese government has been ramping up stimulus measures to boost its economy, including urging the country’s financial system to support the private sector, implementing preferential tax policies and fee cuts, and increasing government spending and investment to indirectly support the real economy. But by far, China has consistently refrained from using universal cash-in-hand measures to stimulate the economy.
The stimulus policies have created a positive impact and H1 2022 economic indicators show signs of recovery to some extent. However, it is still far away from China’s goal of 5.5 percent growth in GDP for 2022. Analysts believe there is no way for China to achieve this goal unless it rolls out more vigorous stimulus plans and substantially relaxes COVID-19 curbs.
That said, some recent surveys show that the business confidence of different groups is improving. According to CEIC Data, a Hong Kong-based firm formed by a team of expert economists and analysts, China’s business confidence dropped by 1.4 percent in June 2022, as compared with a decrease of 2.8 percent YOY in the previous month. The China Association of Small and Medium Enterprises (SMEs) reported that the overall SME Development Index had posted its first increase in June since January 2022, reaching 88.4, an increase of 0.2 points month-on-month.
China has entered the second half of 2022. We’ll keep monitoring where the second largest economy goes from here.
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