China's economy slows as exports surge, revealing weak domestic demand and job creation challenges, particularly for younger workers.
China's economy slowed sharply in the second quarter, exposing weaknesses in its growth model that relies heavily on exports while domestic consumption remains weak, reported Al Jazeera.
Gross domestic product grew 4.3 percent in the quarter ending June, down from 5 percent in the previous quarter and marking the slowest pace in more than three years. The slowdown occurred despite booming exports of artificial intelligence products and electric vehicles.
June exports jumped 27 percent year-on-year, lifting the monthly trade surplus to US$125.6 billion from $105.4 billion in May. Analysts warned that the surge could strain trading partners already pressing China to address imbalances.
Economists noted that domestic demand remains sluggish as losses in the property sector and pandemic-era shocks have eroded household wealth. Consumers have become cautious, saving more and spending less, with cheap exports perceived as coming at the expense of workers.
Reza Hasmath of the University of Alberta stated that job creation is lagging, especially for younger workers under 25, who face underemployment and depressed incomes. He warned that Beijing's reliance on technology exports risks worsening social pressures.
Mark Kruger, an economist in Shanghai, indicated that Beijing is unlikely to launch major stimulus measures, preferring to focus on reducing debt. He noted that the average growth of 4.7 percent so far this year remains within the government's target range.
The slowdown coincides with global energy disruptions stemming from the US and Israel's conflict with Iran and the closure of the Strait of Hormuz. Analysts mentioned that China's oil imports had dropped as it tapped reserves, but renewed supply disruptions could push up inflation and weaken growth further.
