Stay informed with free updates by signing up for the Chinese economy myFT Digest, delivered directly to your inbox. In the latest data released by the National Bureau of Statistics, China’s industrial production grew at the slowest rate in four months in July. This adds to signs of a weak start to the third quarter as a deep property slowdown continues to weigh on the world’s second-largest economy.
Industrial production rose 5.1 per cent year on year in July, slightly missing economists‘ forecasts and showing a decrease from the previous month. Unemployment also rose to 5.2 per cent in July, in line with analysts‘ predictions. President Xi Jinping has been focusing on the high-tech manufacturing sector to bolster China’s economy amidst a three-year property slump that has impacted household consumption and investor confidence.
The government has implemented incremental measures to stabilize the housing market and stimulate household demand, but has refrained from large-scale stimulus efforts. However, with soft factory activity, declining exports, and a decrease in bank loans to the real economy, more easing measures are expected in the coming months to achieve the economic growth target for the year.
Retail sales saw a slight increase in July, but the data revealed the ongoing challenge of balancing strong exports and manufacturing with weaker household demand. New house prices in China’s largest cities dropped, while fixed asset investment grew lower than expected. Manufacturing investment showed strength, but property investment declined, indicating a struggle with domestic demand.
Analysts anticipate more housing easing measures in the future, but warn of a slow recovery due to weak demand in smaller cities and among private developers. The state of the property market has led to concerns from major steel producers, with China Baowu Steel Group warning of the worst downturn since previous slumps. Steel and cement production volumes have also declined, reflecting the challenges faced by the industry.
Overall, the data for July paints a picture of a struggling Chinese economy facing difficulties and challenges in the midst of a property slowdown and weakening domestic demand. Stay informed with the latest updates on China’s economy by signing up for the myFT Digest to receive timely information directly to your inbox.