The Chinese economy grew less than expected in the second quarter, underlining the shaky recovery seen since the reopening in late-2022.

Q2 Growth Comes In Light: China's GDP rose 6.3% year-over-year in the second quarter, faster than the 4.5% rate seen in the first quarter, preliminary estimates released by the National Bureau of Statistics, China, showed.

The growth rate, however, trailed the 7.3% increase estimated by economists, according to Reuters.

On a quarter-over-quarter basis, GDP rose 0.8%, also trailing expectations of 2.2% growth.

Crunching The Numbers: Agricultural production rose 3.3% year-over-year in the first half of 2023 and industrial output growth accelerated from 3% in the first quarter to 3.8% in the first half of the year. The service sector growth also accelerated from 5.4% in the first quarter to 6.4% in the first half of the year.

Retail sales were up 8.2% in the first half of the year and fixed asset investment rose 3.8%. Property investment, which accounts for about one-third of total investment, fell by 7.9%, the South China Morning Post reported.

NBS data showed that Imports fell 0.1%, while exports climbed 3.7% and the trade balance was a surplus of 2.82 trillion yuan ($393.2 billion).

Producer prices showed deflation in the first half of the year, while prices at the consumer level rose 0.7% year-over-year.

“In the first half year, as the economic and social development has fully returned to normal and macro policies have manifested effects, the national economy showed a good momentum of recovery with high-quality development advancing steadily,” NBS said.

The most recent data points show further slackening. The total value of exports and imports fell 6% in June, with exports plunging 8.3% and imports declining by a more modest 2.6%. The annual retail sales growth also slowed to 3.1% in June. The unemployment rate in urban areas was 5.2% in June. The jobless rate for the 16-24 age group hit a new high of 21.3% in June, up from 20.8% in May, SCMP said.

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Consumption-Induced Slowdown: Economists see the risk of a growth downgrade and call for stimuli to rev up growth.

“Certainly, this is a consumption-induced slowdown, which calls for policy support on the demand side. We believe further rate cuts are more or less warranted, and see the [medium-term lending facility] rates will be lowered by another 10 basis points as soon as the third quarter,” said Zhou Hao, chief economist at Guotai Junan International, SCMP reported.

China Stocks In Spotlight: The Chinese stocks listed in the U.S. could be in the spotlight in the wake of slower domestic growth. Most of the high-profile tech names in China are coming off a multi-year slowdown amid economic uncertainties and the government’s clampdown to check their sprawling businesses.

These companies also find themselves in the crosshairs of the U.S.-China political tensions.

The iShares MSCI China ETF (NASDAQ:MCHI), an exchange-traded fund that tracks the performance of U.S.-listed Chinese equities, ended Friday’s session down 1.71% at $46.64. The ETF is down about 1% this year despite the broader market rally.

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