FirstFT: China’s economy loses momentum in second quarter

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China’s economy lost momentum in the second quarter, with gross domestic product expanding 0.8 per cent against the previous three months as falling exports, weak retail sales and a moribund property sector weighed on growth.

The second-quarter growth rate was stronger than the 0.5 per cent forecast in a Reuters analysts’ poll but weaker than the 2.2 per cent growth reported in the first quarter.

Year on year, the economy grew 6.3 per cent in the second quarter because of a low-base effect from last year, when large cities including Shanghai were locked down for an extended period. The Reuters poll had forecast a 7.3 per cent growth rate.

The difficulties facing the world’s second-largest economy will put further pressure on global growth and add to calls for Beijing to step up stimulus measures more than six months after China abandoned tough Covid-19 controls.

Here are two more pieces on China’s economic woes:

• Explainer: While other economies battle rising prices, China is grappling with the opposite problem. Here’s why the country is flirting with deflation.

• The Big Read: As China’s growth fails to pick up post-Covid, calls are growing louder for President Xi Jinping to launch a weighty stimulus package.

And here’s what else I’m keeping tabs on today:

• UN Security Council: British foreign secretary James Cleverly chairs a meeting on the war in Ukraine.

• Dyson lawsuit: London’s High Court hears forced-labour claims by 23 migrant workers and the estate of one deceased employee at the vacuum cleaner manufacturer’s Johor factory in Malaysia.

• UK Post Office scandal: An interim report with recommendations on compensation for sub-postmasters affected by the Horizon affair will be submitted to parliament.

Five more top stories

1. Microsoft has moved closer to its $75bn purchase of Activision Blizzard after a deal with Sony to keep popular game Call of Duty on the Japanese company’s PlayStation console after the acquisition. Sony’s biggest complaint was that the merger would hurt competition by allowing Microsoft to make the game exclusive to its own Xbox platform.

2. Exclusive: A typo has misdirected millions of US military emails to Mali, exposing sensitive information such as diplomatic documents, tax returns, passwords and the travel details of top officers. Mistyping .MIL as .ML, the country identifier for Mali, has led to a steady flow of emails despite repeated warnings over a decade. Read the full story.

3. Surging interest rates have driven the biggest fall in UK households’ aggregate wealth in the postwar era, according to a new report. Household wealth comprised 650 per cent of the national income early this year, down by nearly 200 percentage points since early 2021. Read more findings from the Resolution Foundation’s report.

4. The EU is pressuring China, India and the US to cut greenhouse gas emissions faster while facing an internal fight about the bloc’s own climate targets. Senior officials in Brussels said they wanted the large economies to share the burden, with European consumers and industry beginning to balk at the costs of the necessary green shift in the energy system.

5. More than a quarter of European financial services board members hold four or more posts across different organisations, according to data released today, which also showed more work was needed on gender representation to meet a forthcoming EU directive. Here are more details from the research by EY.

News in-depth

More than 16 months after Russia’s invasion, Ukraine’s urgent need for war supplies has laid Europe’s defence industry bare. While the war may have spurred policymakers and companies into action — with EU ministers agreeing an ambitious target to supply 1mn rounds of ammunition to Ukraine within a year — the reality is that production will take years to match the sudden jump in demand.

We’re also reading . . .

Chart of the day

The gulf between price pressures in the US and the UK is likely to widen to levels not seen since the late 1970s this week. Figures out last week confirmed US consumer price inflation was abating fast, with the annual figure for June falling to a two-year low of 3 per cent. That contrasts with economists’ expectations for the UK at above 8 per cent when figures come in on Wednesday.

Take a break from the news

Everyone complains about tourists. But now, possibly for the first time ever, a few European cities have begun doing something about them. The brief experience of tourist-free tranquillity in these places during lockdown is helping inspire change. Simon Kuper asks if cities should fly in the face of capitalism, reverse decades of economic history and try to repel tourists.

Additional contributions by Benjamin Wilhelm and Gordon Smith