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China Second Quarter GDP at 7.9% lower than expectations of 8.1%

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According to data from China yesterday showed the nation’s economy expanding at a 7.9% pace in the second quarter. This was boosted by strong readings on industrial output (+8.3% Y/Y), retail sales (+13.9% Y/Y) and fixed-asset investment (+12.6% Y/Y) for June. However, the GDP number missed expectations for a rise of 8.1%. This was weighed down by higher raw material costs and new coronavirus outbreaks. The figure was also far slower than the 18.3% Y/Y jump recorded during the first three months of the year, however, that was expected, given the statistical distortions from the beginning of the pandemic.

Bigger picture: Despite some economic resilience, expectations are building that policymakers may have to do more to support the recovery. Beijing announced a cut to its new reserve ratio requirement last week, freeing up more liquidity in the banking sector for lending. Stock in Shanghai even rose 1% following the latest data on increased chances China will intervene more forcefully to keep its growth momentum going in the latter half of 2021.

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