Macroeconomic Analysis of Q2: The Slowdown Makes Space for Future Growth

Abstract

In the first half of this year, China’s GDP grew 7.6% (7.5% in the second quarter), industrial value added rose 9.3% and the CPI climbed 2.4% (2.7% in June), continuing the steady growth at a slightly decelerated pace. This is positive, because it has made space for the economic slowdown and restructuring. While liquidity was generally sufficient, China experienced a ‘money shortage’ as a result of the maturity mismatch and idling of bank assets and liabilities. The central bank aptly refused to ‘ease’ monetary policy, which was conducive to securing long-term financial stability and economic growth at the expense of short-term market fluctuations.