Hong Kong — updated Covid-19 restrictions, Real estate recession worsening The outlook for the Chinese economy is slowing, although there are some signs of improvement as stimulus measures have been launched.
China on Friday falling housing prices Accelerating, private consumption was still weak. But the data weren’t all bad. Infrastructure investment recovered faster than expected, China’s labor market Improved.
Still, many economists warn that seemingly strong indicators are hiding underlying weakness Second largest economy in the world.
“reality [is] not as good as the headline [data] suggests,” writes the economist.
In Friday’s note to clients, PLC highlighted and intensified headwinds, including a deeper real estate contraction Covid-19 lockdown Weakening export demand.
Average new home prices in 70 major cities in China fell 2.1% in August from the previous month, accelerating from a 1.7% drop in July, according to calculations based on data released by the National Bureau of Statistics of China on Friday.
August’s rate of decline was the steepest year-over-year drop since September 2015, despite the country’s rate cuts and easing of property restrictions last month. On a month-to-month basis, new home prices fell or remained flat for the 12th straight month, surpassing his 11-month decline in 2014-15.
Weakness continues to plague other sectors of the economy as Covid-19 restrictions continue to dampen demand across the country.
Retail sales, a key measure of consumption of Chinese goods and services, remained soft. Year-over-year growth in retail sales accelerated from 2.7% in July to 5.4% in August, largely as a result of a lower year-on-year comparison basis. Seasonally adjusted retail sales actually fell 0.8% when compared directly to July, according to Capital Economics.
Tourism data from the Mid-Autumn Festival long weekend in early September suggests that Chinese consumers are likely to be tightening their purse strings for now. Data from the Ministry of Culture and Tourism showed that tourism spending fell by 22.8% year-on-year during the three-day weekend.Mobility index by Chinese tech companies
On the other hand, the number of passengers decreased by 38% year-on-year.
According to industry tracker Lighthouse Data Pro, box office receipts for films plunged 25.9% year-on-year over the long weekend, despite more films being released this year.
The recovery in other key economic indicators was largely due to momentum in the auto and equipment manufacturing sector and China’s economically strong coastal provinces, but the positive year-on-year comparison also contributed to the figures. It helped level off, said a spokesman for the National Bureau of Statistics. Fu Linghui said on Friday.
China’s fixed asset investment grew 5.8% year-on-year in the first eight months of the year, beating the median forecast of 5.5% growth among economists surveyed by The Wall Street Journal. The increase in investment was driven by strong spending on infrastructure projects.
Industrial production, a measure of factory output, has also stabilized, easing power shortages caused by extreme heat and drought across the country. The August index rose 4.2% year-on-year, beating expectations and accelerating from his 3.8% rise in July.
China’s labor market has also improved. The country’s leading unemployment rate, the urban unemployment rate, fell to 5.3% in August from 5.4% the previous month. The youth unemployment rate also fell to 18.7% from a record high of 19.9% in July.
Signs of improvement follow several steps. Chinese authorities announced last month This includes providing hundreds of billions of yuan of credit to support infrastructure projects and support the power and agricultural sectors.Surprisingly, the central bank of the country cut two major interest rates Mid August.
“Overall, August data points to a slight loss of momentum across the board,” economists at Capital Economics said in a note to clients, with business activity remaining weak through the rest of the year. predicted to be
Export recession According to reports last week, the Chinese government may not be able to count on sales of Chinese-made goods for much longer to offset softening domestic demand.
A weakening Chinese currency. 1 dollar = below 7 yuan For the first time in over two years, it could help boost the competitiveness of Chinese products in the international market.but it also fueling concerns in Beijing Capital flight could complicate the impulse for further mitigation.
Controlling Covid-19 remains another concern, almost three years after the pandemic.In recent weeks, government officials have strengthened their vigilance Combat potential outbreaks ahead of the Communist Party of China Congress scheduled to begin on October 16th.
As of last week, cities with districts classified as medium- to high-risk accounted for about 37% of China’s gross domestic product, and the measures put Shanghai on the brink of the April outbreak. surpassing the level of restrictions imposed during the early wave ofin the middle of harsh lockdownaccording to
goldman sachs group Ltd.
As a result of Covid-19 and housing problems, economists continue to cut China’s growth forecasts for this year, often below 3%. Slowing growth in China has lost a once-reliable source of growth, fueling fears of a global recession.
Fitch Ratings said this week it expects China’s GDP to expand 2.8% in 2022 from its previous forecast of 3.7%. The credit rating agency expects China’s GDP to recover moderately to 4.5% next year, down from his previous forecast of 5.3%.
Barclays chief China economist Jian Zhang last week cut his full-year growth forecast to 2.6% from an earlier forecast of 3.1%.
This week, China’s cabinet announced that it would provide $28.7 billion worth of new government subsidies to manufacturers and service providers, while deferring more than $60 billion in taxes on manufacturers. The country’s major state-owned banks also cut deposit rates on Thursday. Analysts say it could pave the way for central banks to cut benchmark lending rates.
“The stimulus hasn’t done much in terms of boosting demand,” said Bo Chuan, senior strategist at Loomis Sails.
— Grace Chu and Binyan Wang from Beijing contributed to this article.
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