Employees working on an air conditioner production line at a Midea factory in Guangzhou, China.
Jade Gao | AFP | Getty Images
BEIJING — China reported data for July that fell well short of expectations.
Retail sales grew 2.7% in July from a year ago, the Office for National Statistics said on Monday. That’s well below the 5 percent growth forecast by a Reuters poll, and down from 3.1 percent growth in June. Within retail sales, catering, furniture and construction-related categories experienced declines.
Auto sales, one of the largest categories by value, rose 9.7%. The category of gold, silver and jewelry was the one that increased sales the most, by 22.1%.
Industrial production rose 3.8%, also missing expectations for 4.6% growth and down from the previous month’s 3.9% increase.
Investment in fixed assets during the first seven months of the year increased by 5.7% compared to a year ago, missing expectations for growth of 6.2%.
Investment in real estate fell at a faster pace in July than in June, while investment in manufacturing slowed its pace of growth. Investment in infrastructure increased at a slightly higher rate in July than in June. Fixed asset investment data is only published annually.
The unemployment rate among China’s youth, aged 16 to 24, was 19.9%. The unemployment rate for all ages in cities was 5.4%.
“The national economy maintained the momentum of the recovery,” the statistics office said in a statement. But he warned of rising “stagflation risks” globally and said “the foundations for the recovery of the domestic economy have not yet been solidified.”
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Analysts’ forecasts for July were expected to show a revival of economic activity from June as China put the worst of the Covid-19-related lockdowns behind it, particularly in the metropolis of Shanghai.
Exports remained robust last month, rising 18% year-on-year in US dollars, despite growing concerns about falling global demand. Imports lagged and rose just 2.3% in July from a year earlier.
However, China’s massive real estate sector has come under new pressure this summer. Many homebuyers stopped mortgage payments to protest developers’ delays in building homes, which typically sell before completion in China.
Declining confidence puts future developer sales and an important source of cash flow at risk.
The potential for a Covid outbreak has continued to be another drag on sentiment. A surge in infections at tourist destinations, particularly on the island province of Hainan, has left tens of thousands of tourists stranded this month.
The local situation reflects the large gap between the goals set at the beginning of the year and the reality that has followed. Hainan had set a GDP target of 9%, but was only able to grow 1.6% in the first six months.
Similarly, domestically, China’s GDP grew by just 2.5% in the first half of the year, well below the full-year target of around 5 .5% established in March.
China’s top leaders signaled at a meeting in late July that the country could miss its GDP target for the year. The meeting did not signal any imminent large-scale stimulus, although it noted the importance of stabilizing prices.
The country’s consumer price index hit a two-year high in July as pork prices rebounded.
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