China recorded an economic recovery in August with a series of indicators that exceeded expectations, but some analysts warned that this optimism may not last long, despite the measures taken by the authorities.
In an effort to stimulate activity in the world’s second economic power, Beijing has doubled targeted measures in recent weeks, but it still refrains from approving a large-scale recovery plan called for by economists, for fear that it will increase its debt.
In particular, the government approved tax facilities for families and companies with the aim of supporting consumption.
The markets were expecting the effects of the measures announced in the past weeks to appear on the economy.
Retail sales, the main indicator of household consumption, rose by 4.6% in August compared to the same month last year, according to official figures released on Friday by the National Statistics Office.
These data reflect a much faster pace than in July, when growth reached 2.5 percent, and also higher than the expectations of analysts surveyed by Bloomberg at 3 percent.
This is considered the largest growth since May for this indicator that the markets are monitoring.
A difficult situation in the real estate sector
However, economic activity is still suffering from the slowdown in the global economy, which is reflected in the demand for Chinese products, and thus in this country’s exports. It is also directly affected by the severe crisis in the real estate sector.
In an effort to stimulate this sector, several major cities, such as Beijing, Shanghai and Canton, have lowered their standards for obtaining a mortgage loan, and have also allowed those who buy their first home to re-negotiate the interest rates on their loans.
However, these measures have not led to any results so far, as real estate prices recorded an additional increase in August at an annual pace.
This decline now affects 52 cities out of seventy that constitute a reference group, compared to 49 in July and 38 in June, according to figures from the National Statistics Office.
On Thursday, Moody’s credit rating agency lowered its outlook for the Chinese real estate sector from “stable” to “negative,” considering that the support measures will only have a “short-term” impact.
Moody’s expected sales to decline by about 5 percent over the next six to 12 months.
The real estate sector is a mainstay of the economy and has long accounted for a quarter of China’s gross domestic product.
Unemployment is apparently declining
Industrial production also accelerated sharply in August, achieving growth of 4.5 percent at an annual pace, which is a much higher rate than July, which reached 3.7 percent at that time, and than analysts expected at 3.9 percent.
As a result, the unemployment rate decreased slightly last month in China for the total working-age population, recording 5.2 percent, according to official figures, which no longer mention the percentage for the segment between 16 and 24 years, after youth unemployment recorded a record high in June, amounting to 21.3 percent. .
However, a spokesman for the National Bureau of Statistics, Fu Linghui, confirmed that the labor market for young people “has clearly improved,” without announcing detailed figures for last month.
The unemployment rate in China is calculated for urban areas only, and thus reflects only a partial picture of the general situation.
On the other hand, investment in fixed capital slowed to 3.2 percent, at an annual pace during the first eight months of the year.
This is the fourth consecutive month of slowdown in this indicator, which reflects spending in real estate, infrastructure, equipment, and machinery, which are sectors that the government relied on in the past to stimulate economic activity.
persistent need
In an effort to support the economic recovery, the Chinese Central Bank again lowered a reference interest rate on Thursday, the third such measure in a few weeks.
The mandatory reserve ratio, which determines the share of deposits that banks are supposed to deposit in the central bank as a precautionary measure, was reduced by 0.25 percentage points to about 7.4 percent.
This measure is supposed to allow banks to grant more loans on better terms.
Economic expert Qiu Zhang of Pinpoint Asset Management commented that this reduction is “an interesting indicator that there is an urgent need to stimulate growth,” without ruling out taking other measures to “establish sustainable stability” on the economic front.
2023-09-15 15:40:39
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