Problems grow in China’s economy

July indicators in China reveal that the country’s economy continues to struggle to recover post-COVID-19 in many areas, including production, consumption, investment and employment.

The National Statistics Office (UIB) announced the data set consisting of figures for industrial production, retail sales and unemployment that cover the month of July and the first 7 months in the country.

Thus, while large industrial production rose 3.7 percent in July compared to the same period a year earlier, it lagged behind June’s 4.4 percent increase. Retail sales, which is considered a measure of consumption, rose 2.5 percent on an annual basis in July, outpacing June’s 3.1 percent rise.

CENTRAL BANK LOWER INTEREST, YUAN LOWER

China also cut one-year interest rates by 15 basis points to support economic activity, making it the biggest rate cut since the start of the covid epidemic. The yuan hit a 9.5-month low as economic vulnerabilities increased.

The yuan was trading at 7.2743 against the dollar, sources told Reuters.

THE PROBLEM GROWS IN THE REAL ESTATE SECTOR

On the other hand, while concerns about the debt problems of China’s largest private real estate development company could put pressure on homebuyers and financial institutions, there were concerns in the markets, while the sector’s recovery forecasts and the economy in the short term future weakened considerably.

The real estate sector, which is one of the pillars of the Chinese economy, was already going through a difficult time due to the fall in sales, the liquidity shortage and the delinquencies of several real estate development companies since 2021.

Chinese property development company Country Garden’s debt problems have deepened with the halting of trading in its national bonds. Problems in the real estate sector have raised concerns about the economic recovery.

Pressure is mounting for the authorities to restore confidence in the economy, amid concerns that more real estate companies could be on the brink of bankruptcy without financial support.

“If political support does not pick up soon, the economy is at risk of entering a recession,” Capital Economics analyst Julian Evans-Pritchard said in a note to investors.

Robert Carnell, head of Asia-Pacific research at ING, said in a note: “The market expected the Bank of China to wait until September before easing monetary policy again. “Today’s cuts show that officials are increasingly concerned about the state of the macroeconomy,” he said.

UNANNOUNCED YOUTH UNEMPLOYMENT NUMBERS

While the unemployment rate in urban areas rose 0.1 points to 5.3 in July compared to the previous month, the National Statistics Office did not release unemployment figures by age groups, including the high numbers of youth unemployment, arguing that “labor statistics must be improved”.

Unemployment among the young population aged 16 to 24, which has been high in the country since the start of the Covid-19 epidemic, reached its highest level since the 1990s, rising 21.3 percent in June. .

The suspension of the release of youth unemployment figures instantly became a trend on the Chinese social media platform Weibo. Some users reacted to the Chinese Bureau of Statistics. (AA, REUTERS, SPEAKER)