China’s humming factories threw a lifeline to an economy struggling with weak demand in the second quarter. That’s also given policymakers space to fight deflation — if they choose to do more than just hitting their growth target.
Gross domestic product beat expectations to grow 5.2% between April and June, bringing the official 5% expansion goal for the year within reach. But while strong exports made up for sluggish consumption at home, they also masked a worsening decline in prices that threatens to drag the world’s second-largest economy into a prolonged slowdown.
Nominal GDP, which accounts for price changes, grew only 3.9%, the least outside the pandemic since the quarterly data began in 1993. The GDP deflator, a measure of economywide prices, extended the longest streak of decline on record.
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