Doubts about the Chinese economy extend to more corners of the activity. From the unknowns in real estate, we have moved on to uncertainty in consumption and industry. The bad data that trickles in week after week increases the pressure and yesterday everything was reflected in the stock markets. The Hang Seng, Hong Kong's benchmark index, fell 2.1% and was down 6% on the week, the worst in five months, Reuters reports. The CSI 300, with the main shares in Shanghai and Shenzhen, lost 1.2% and nearly 3% weekly.
Worrying numbers have been piling up in recent days. Industrial production grew from 4.4% to 3.7%. Consumption, from 3.1% to 2.5%. And retail sales advanced by 2.5%, six tenths less. It grows, but less. The general feeling is that the post-pandemic push, which was also supposed to pull global growth, has not reached its potential. "At the beginning of the year, the Chinese economy was booming. But the outlook has worsened and now looks quite gloomy", analyzed Jonas Goltermann, of Capital Economics.
The authorities have moved, but the measures have not yet been weighted or celebrated in the market. The People's Bank of China, the central bank, lowered the rate for one-year loans by 15 points, to 2.5%, a minimum since 2020, at the beginning of the week, to strengthen the economy and liquidity. And yesterday the local regulator launched new measures to facilitate stock market operations.
The mission is to keep the machinery from freezing and the money from flowing. GDP is holding up, but the 6.3% improvement in the second quarter is far from what was expected. Doubts have also reached the yuan, at annual lows against the dollar and whose rate the central bank is trying to support. "The rapid depreciation could further weaken confidence," according to Xiaojia Zhi, of Crédit Agricole CIB.
It also does not help that Beijing is suddenly hiding figures such as youth unemployment, at records and above 21%, the publication of which is suspended until the measurement is readjusted. Added obstacles when there is already something to worry about: the new fear in real estate, which accounts for 20% of the economy, is called Country Garden. The promoter has this week suspended the negotiation of several bonds and is incurring a breach in the payment of the coupons. After revealing that it expects losses of up to 7,000 million euros, its shares fell by nearly 20%. So far this month, half of its quotation is left and its fall could have an impact on the financial sector. As has happened before, the problem is that it is not selling fast enough to meet the debt. It's similar to the case of Evergrande, which just entered bankruptcy protection in the US to let creditors breathe while it restructures its more than $300 billion in debt.
