How China’s Economy Compares to the US’s After Latest Results

China’s statistics bureau on Monday reported solid growth for the country in the first half of 2024, but analysts say an ongoing property crunch and muted domestic demand continue to weigh on the world’s second-largest economy.

Meanwhile, the U.S. economy is set to stabilize in the second half of 2024 and into next year, auditing and financial advisory firm Deloitte predicts, with consumer demand still strong. The official updated numbers for the U.S. will be published on July 25.

China’s National Bureau of Statistics reported on Monday that the country’s GDP grew by 5 percent in the first half of 2024. The second quarter saw a year-on-year growth rate of 4.7 percent, slightly down from the 5.3 percent growth in Q1, indicating a slower pace but still robust compared to other major economies.

“Though the GDP growth in the second quarter is lower than the first quarter, it’s still a relatively fast growth among major economies, which builds a sound foundation for the achievement of the annual GDP target,” state-run media outlet the Global Times quoted Chinese economist Chen Fengying, as saying.

Beijing again set a goal of “around 5 percent” economic expansion this year after logging 5.2 percent in 2023. Many subject matter experts, including China’s former No. 2 Li Keqiang, have not taken the country’s growth figures at face value, however.

The data release coincided with the start of the Third Plenum in Beijing, where senior officials are expected to discuss reforms to spur economic growth in the latter half of the year​.

“After a feisty start to the year thanks to late 2023 infrastructure and borrowing measures, and robust exports, the economy reverted in Q2 to just less than 3 percent annualised GDP growth, which is bang in line with its trend estimate of growth medium term,” George Magnus, an associate at the University of Oxford China Centre and former chief economist at UBS Investment bank, told Newsweek.

He noted that still-low post-pandemic consumption and ongoing real estate crisis, which began with the 2021 default of megadeveloper Evergrande, still hamper the country’s growth prospects.

Retail sales of consumer goods, an indicator of domestic demand, increased by 3.7 percent YOY, a smaller margin than the 7.2 percent reported for 2023.

The Chinese embassy in the U.S. did not immediately respond to a written request for comment.

Washington reported a slower GDP growth rate of 1.4 percent year-on-year for the first quarter, a decrease from the 3.4 percent growth in Q3 2023.

The U.S. Department of Commerce’s Bureau of Economic Analysis attributed this Q1 growth to increases in consumer spending, housing investment, business investment, and state and local government spending, partially offset by a decrease in inventory investment and an increase in imports.

The Dow surged to a record on Tuesday after the U.S. Census Bureau released a preliminary estimate on June consumer demand. Retail sales are estimated to have been up about 2.5 percent same period last year, unadjusted for price changes.

Deloitte economist Robyn Gibbard in an analysis released last month noted that the U.S. economy expanded at a slower pace in Q1, predicting growth would hit 2.4 percent for 2024 as a whole before slowing to a more modest 1.1 percent next year.

However, the analyst remained upbeat. “Consumer spending is expected to remain strong for the first half of 2024 due to sustained improvements in the labor market and stable levels of spending by the business and government sectors,” he wrote.

China’s economy, once believed to be on track to be the world’s largest, is no longer on this trajectory.

World Bank data shows the gap between the top two economies widened last year. China’s was just two-thirds the size of the U.S.’s down from 70 percent in 2022 and 76 percent in 2021.