‘Open door red’ to ‘summer blue’: will second quarter slam China’s GDP again?

Each spring, China’s policymakers and state media customarily toss around an idiom to bid the economy an auspicious start: kai men hong – literally, “open door red”.

It is an expression commonly used when a new restaurant or shop opens, as it conveys an enthusiastic desire for a prosperous beginning.

But in tough economic times, when prosperity takes a back seat to lethargy, by the time summer rolls around and temperatures rise, momentum has a tendency to fizzle. Some years, enthusiasm downright nosedives after a kai men hong start.

Enter what has been depressingly dubbed the “summer blue” period – juxtaposing the propitious “red” of spring – with growth trends declining in a year’s second quarter as enthusiasm evaporates under a warming sun.

Widespread market angst last summer remains burned into memory, as the economy started with robust year-on-year growth of 5.3 per cent in the first quarter but abruptly slackened in the second quarter, with growth dipping to 4.7 per cent. Third-quarter growth cooled further to 4.6 per cent.

Noticeable declines in quarterly growth following a kai men hong start also occurred in 2019, as growth slowed quarter by quarter at the onset of US President Donald Trump’s first-term trade war. Similar slowdowns in second-quarter growth were seen in 2010 and 2012.

For this year, China is set to release its first-quarter gross domestic product (GDP) growth on Wednesday. The consensus among economists before the disclosure was that the world’s second-largest economy looked to be impressive, with an average growth estimate of 5.16 per cent, according to financial data provider Wind.