China Macro Analysis

Macro Focus: China Q2 GDP and other macro indicators

According to the data released by China’s National Bureau of Statistics, in Q2 2021, China’s gross domestic product (GDP) reached 28,285.7 billion yuan, recording a year-on-year increase of 7.9% at constant prices and an average growth rate of 5.5% in two years.

Table 1. China’s Year-on-Year GDP growth rate (%)
years1 quarter2 quarter3 quarters4th quarter

Table 2. China’s Quarter-on-Quarter growth rate (%)
years1 quarter2 quarter3 quarters4th quarter

In the first half of the year, the contribution of final consumption expenditure to GDP growth was 61.7%.The contribution of total capital formation to GDP growth was 19.2%. The contribution of net exports of goods and services to GDP growth in the second quarter was 9.7%.

Services value added increased at an average growth rate of 4.9% in two years. The added value of services accounted for 55.7% of the GDP and contributed 53.0% to the national economic growth. Services account for around 80% of the country’s actual use of foreign capital.

Focus on the High Tech sector

Among the noticeable outcomes, the production index of the information transmission, software and information technology service increased by 19.5% in the first half of the year on a year-on-year basis. In a related development, online retail sales of physical goods increased by 18.7% year-on-year in the first half of the year, accounting for 23.7% of the total retail sales of consumer goods over the period. The two-year average growth rate stood at 16.5%.

 From January to May, mobile Internet traffic across the country reached 84.61 billion GB, a year-on-year increase of 38.5%, accelerating growth for three consecutive months. The operating income of large enterprises in the Internet and related services branch, and in the software and information technology services branch increased by 34.5% and 34.3 year-on-year respectively. The two-year average growth rate was 24.6% and 21.2% respectively, significantly higher than the overall growth of large service enterprises.

Despite broadly positive figures in the services sector, China’s NBS officials warn of the prevailing uncertainties and downside risks to growth. In view of the latter, they urge the government to “accelerate the stimulation of domestic demand potential, smooth economic circulation, consolidate the overall stable recovery.”

GDP and Macro outlook

We forecast GDP growth of 8.2 in 2021 and 6.5 in 2022 provided no additional stimulus measures are implemented. Q3 QoQ GDP growth is expected to be around 0.5 and Q4 QoQ is expected to hover around 1.9 before converging to a trending QoQ growth of 1.8 in 2022.


Table 3. Second quarter and first half 2021 GDP preliminary data by sector
100 million yuan%
primary sector17070284027.67.8
Agriculture, forestry, animal husbandry and fishery17,864297517.57.7
Secondary sector1145312071547.514.8
# Manufacturing800371485239.217.0
Construction industry21318333351.88.6
Tertiary sector1512572966118.311.8
Wholesale and retail26861508959.617.0
Transportation, storage and postal services126372270412.721.0
Accommodation and Catering services4169822817.129.1
Financial services22563456374.14.7
Real estate services20282397427.113.6
Information transmission, software and information technology services118682318719.520.3
Leasing and business services7714154645.86.9
Other services43945886176.27.5