The Chinese economy is showing signs of faltering, with the latest retail sales data falling for the first time in five months and factory output growing slower than expected.
Retail sales
fell by 0.5 percent in the month of October after rising by 2.5 percent in the previous month. This was the first decline in retail sales since May when it had fallen by 6.7 percent. It is also more than 6 percent below this year’s peak retail sales growth of 6.7 percent recorded in February.
China’s
industrial production expanded by 5 percent year-over-year in October, less than the market expectations of 5.2 percent growth. It was lower than September’s industrial production expansion of 6.3 percent, which was the fastest growth rate in seven months.
The second-largest economy in the world is dealing with a property downturn and extended COVID-19 restrictions that have dampened the economy. In October, COVID-19 outbreaks expanded across the country, disrupting sectors like the restaurant industry.
At a
press conference in Beijing, Fu Linghui, spokesperson of the National Bureau of Statistics admitted that the pandemic containment policies were placing “huge” pressure on the Chinese economy, according to Reuters.
Shrinking demand, weakening expectations, and supply shocks are adding more pressure on economic operations, he added.
Beijing’s COVID Zero policy and a sinking property market “have made the recovery
increasingly vulnerable, especially now that exports are contracting,” Bloomberg’s China economist Eric Zhu said in a report. “The raft of policy shifts in recent days is unlikely to turn the tide immediately, but risks are now pointing more to the upside for next year’s growth.”
China’s Property Situation, Market Outlook
Property investment in China declined by 16 percent in October on an annual basis after falling by 12.1 percent in September. This is the biggest drop since the January–February period in 2020, according to an analysis by Reuters.
By floor area, property sales decreased by 23.2 percent in October, which is the 15th straight month of declines.
The property sector has been under stress due to Beijing’s attempt to limit excessive borrowing. On Friday, financial regulators unveiled a
16-point plan aimed at rescuing the sector.
Property developers will now be able to access pre-sale housing funds, a decision that is expected to ease the liquidity crunch facing the industry.
Business outlook in China dropped to a historic low according to an annual
report published by the American Chamber of Commerce in Shanghai in October. Only 55 percent of companies surveyed in the report expressed optimism or slight optimism about China’s 5-year business outlook, which is a steep 23 percent decline from last year.
The percentage of respondents expecting year-over-year revenue growth in 2022 fell to 47 percent, which is the lowest expectation in at least 10 years.
