Employees working on an air conditioner production line at a Midea factory in Guangzhou, China.
Jade Gao | AFP | fake images
BEIJING – China reported July data that was well below expectations.
Retail sales grew 2.7% in July from a year earlier, the Office for National Statistics said on Monday. That is well below the 5% growth forecast in a Reuters poll, and down from 3.1% growth in June. Within retail sales, the categories related to restaurants, furniture and construction experienced declines.
Car sales, one of the largest categories by value, rose 9.7%. The category of gold, silver and jewelry was the one that increased its sales the most, with an increase of 22.1%.
Industrial production rose 3.8%, also below expectations for 4.6% growth and a drop from the previous month’s 3.9% rise.
Fixed asset investment for the first seven months of the year rose 5.7% from a year earlier, below expectations for 6.2% growth.
Investment in real estate fell at a faster pace in July than in June, while investment in manufacturing slowed down its pace of growth. Infrastructure investment increased at a slightly faster pace in July than in June. Fixed asset investment data is only published annually.
The unemployment rate among China’s youth, ages 16 to 24, was a high 19.9%. The unemployment rate for all ages in the cities was 5.4%.
“The national economy is maintaining the momentum of the recovery,” the statistics office said in a statement. But he warned of growing “stagflation risks” globally, saying “the basis for the recovery of the national economy has not yet been consolidated.”
Analyst forecasts for July were projected to show a pick-up in economic activity from June as China left behind the worst of this year’s Covid-related lockdowns, especially in the Shanghai metropolis.
Exports remained strong last month, rising 18% year over year in US dollar terms despite growing concerns about falling global demand. Imports lagged behind, rising just 2.3% in July from a year earlier.
However, China’s huge real estate sector has come under renewed pressure this summer. Many homebuyers defaulted on their mortgage payments to protest developer delays in housing construction, which is typically sold before completion in China.
The fall of confidence puts the developers’ future sales, and a major source of cash flow, at risk.
The potential for a covid outbreak remains another drag on sentiment. A wave of infections in tourist destinations, especially in the island province of Hainan, stranded tens of thousands of tourists this month.
The local situation reflects the great gap between the goals set at the beginning of the year and the subsequent reality. Hainan had set a GDP target of 9%, but was only able to grow 1.6% in the first six months.
Similarly, at the national level, China’s GDP grew by just 2.5% in the first half of the year, well below the annual target of around 5.5% set in March.
China’s top leaders named at meeting in late July the country could miss its GDP target for the year. The meeting did not signal any upcoming large-scale stimulus, though it noted the importance of stabilizing prices.
From the country The consumer price index hit a two-year high in July when hog prices rebounded.
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