Data pointing to the negative side of the Chinese economy rises

Negativities for China, the world’s second-largest economy, continue to mount.

While data from the country’s industrial and construction sectors point to deterioration, foreigners in asset markets continue to sell their shares.

Economists remain pessimistic about China’s economic prospects. Forecasters surveyed by Bloomberg lowered their growth expectations for both 2023 and 2024.

THE MANUFACTURING SECTOR SHUTS DOWN, FOREIGN SALES INCREASED STRONGLY

China’s manufacturing sector also contracted for the fifth consecutive year in August. The purchasing managers’ index (PMI) for the country’s manufacturing sector remained below the 50 level, indicating a contraction. The manufacturing PMI was 49.7 in August.

In addition, foreign sales in Chinese markets increased considerably. Foreigners sold a record $12 billion worth of Chinese stocks in August amid concerns about slowing growth in the Chinese economy and a worsening crisis in the country’s real estate sector.

On the other hand, the inability of Chinese builders to pay their dollar debts is seen as a sign that the country’s real estate crisis, which caused the collapse of 53 companies in two years, will worsen.

THE REAL ESTATE CRISIS CONTINUES

Investment in the real estate sector fell 7.9 percent in the first half of this year, according to official data. The industry as a whole contracted in the last quarter and continued its contraction trend from 2021.

Country Garden Holdings, once China’s biggest developer by sales, could be the next domino if it fails to make up for the two bonus coupons it missed on Aug. 7 at the end of the 30-day grace period. The company reported a loss of $6.7 billion in the first half of the year alone.

The real estate sector represents about 30 percent of the country’s total output. Downsides facing the industry include heavy debt loads and a slowdown in demand for new properties. This makes growth much lower than expected.