The evolution of economic activity in China disappoints. The data revealed this Monday by the official statistical office, from industrial production to retail sales, have registered lower growth than expected by Beijing's covid-zero policy, certifying a slowdown and pushing a reduction in interest rates.
Industrial production grew 3.8% in July, lower than the 3.9% in June and the 4.6% expected by analysts. Retail sales advanced by 2.7%, far from the expected 5% and the previous 3.1%, dragged down by the drop in tourism. For its part, investment in fixed assets grew 5.7%, five tenths below forecast. And according to a Bloomberg survey, demand for Christmas products has stagnated over the past year.
From the Chinese statistical office they attribute the apathy to the covid outbreaks and heat waves in the south, with droughts that threaten crops. "July's data suggests the post-lockdown recovery has run out of steam as the reopening momentum faded and mortgage boycotts triggered a renewed deterioration in the real estate sector," agreed Julian Evans-Pritchard, senior China economist at Capital Economics.
The latter refers to the crisis in the real estate market, with a suspension of payments by customers due to the uncertainty of the progress of promotions. According to figures published this Monday, real estate investment contracted 12.3%, the biggest fall of the year, while the fall in new sales reached 29%.
Thus, China is struggling to shake off the blow to growth in the last quarter - when it barely advanced four tenths - due to the strict restrictions due to covid, which led some economists to lower their projections. To spur activity, the Chinese central bank has announced the second reduction in interest rates in 2022 (from 2.85% to 2.75% in the one-year loan rate and from 2.10% to 2% short-term operations) and more credit facilities, with an injection into the banking system of some 58,000 million euros.
Economists are wary that it will be enough. "As credit growth has proven less sensitive to policy easing than in the past, this is probably not enough to stave off further economic weakness," Capital Economics said. cautious about taking on more debt," says Wang Jung, director of the China Chief Economist Forum.
The risks are still there, as many Chinese cities, including manufacturing hubs and popular tourist hubs, imposed lockdown measures in July after new outbreaks of the more transmissible omicron variant were found. In the city of Yiwu, a key global supplier of cheap products, lockdowns have been imposed since last August 11.
The difficulties make the growth target of 5.5% for the year more and more difficult.
