Retail sales and industrial production in China suffered an unexpected slowdown in July, due to a rebound in Covid-19 and a real estate crisis that weighed heavily on activity, according to official figures published on Monday.
The main indicator of household spending, retail sales rose 2.7% year-on-year last month, compared to 3.1% in June, the National Bureau of Statistics (BNS) announced. Analysts, on the contrary, anticipated an acceleration (5%), thanks to a resumption of activity in the country, heavily penalized in the spring by the confinement of Shanghai, the Chinese economic capital.
For its part, industrial production increased 3.8% annually last month, but this rate is lower than that of June (3.9%). Analysts expected a rebound (4.6%). China is one of the latest countries to apply a so-called “covid zero” strategy against the epidemic. This health policy consists of massive controls, mandatory quarantines in the event of a positive PCR, and selective confinements.
Investment slows for the fifth consecutive month
Despite everything, the country has faced an epidemic rebound in recent weeks, limited in terms of cases but affecting many provinces. Tens of thousands of tourists are especially confined to the tropical island of Sanya (south), a very popular destination in China at this time of year. Positive cases of Covid-19 have also been registered in Tibet (west) and Xinjiang (northwest), two regions highly dependent on tourism for the local economy.
These epidemic spikes add to the difficulties that were already weighing on the Chinese economy: slow consumption, Beijing’s turn of the screw against several dynamic sectors, including technology, uncertainties related to Ukraine but also the real estate crisis. For its part, investment in fixed assets moderated again in July (down to 5.7%). This is the fifth consecutive month of decline and another sign that the economic outlook remains bleak.
As for the unemployment rate, it fell slightly in July (5.4%), after 5.5% in the previous month. Specially monitored by the authorities and calculated only for urban dwellers, the unemployment rate had reached an all-time high of 6.2% in February 2020, at the height of the epidemic, before falling.
Source: BFM TV
