China’s economy grew 6.3% in Q2 2023, from 4.5% in Q1—much slower than the 7.3% expected, given China’s reopening after Covid-19 in January this year. The year-on-year growth was primarily driven by the base effect from last year’s corresponding period, as quarterly growth was 0.8%.
Behind this performance is the slowdown (or relatively slow resurgence) of other aspects of the economy. China is experiencing deflation, reflected in the decline in the consumer price index by 0.3% (the first since February 2021). Unemployment increased to 5.3% in July after being 5.2% for three consecutive months. Likewise, youth unemployment increased by 21.3%. Also, the Chinese yuan has depreciated against the dollar to its lowest since 2010. These factors signal that the world’s second-largest economy risks a recession that could significantly impact the world.
There have been mixed reactions about the expected impact of China’s economic slowdown on the global economy. Declined trade