At the beginning of the second half of the year, China’s already shaky economy sputtered even more as unanticipated factory slowdowns, a worsening real estate market downturn, and the threat of widespread job cutbacks persisted.
In July, manufacturing activity increased less quickly than anticipated compared to June, when broad COVID lockdowns were removed, according to a private poll released by Caixin on Monday. This came on top of a negative official survey released on Sunday that showed the industry actually shrank in January.
On Monday, China Index Academy, one of the biggest independent real estate research firms in the nation, released a survey that revealed property sales by floor area in 17 cities it tracks fell 33.4 percent in July compared to a post-lockdown jump of 88.9 percent in June. This was because buyers avoided a market that was becoming more and more saturated with desperate sellers.
The top officials of the nation indicated this week that they were ready to fall short of the 5.5 percent government growth target for 2022, the year that President Xi Jinping is anticipated to win a record-breaking third term in office.
Despite worries about a global recession, unpredictability from the Ukraine war, and the possibility of recurrent COVID lockdowns at home, the second quarter’s gross domestic product only increased by 0.4 percent year over year. Nonetheless, authorities have so far refrained from implementing significant stimulus.
After the second quarter’s (GDP) plunged, “stagnation is what everyone is worried about more,” said Nie Wen, a Shanghai-based analyst at Hwabao Trust.
“In the second half, accelerating the recovery of consumption would be more economically important.”
After COVID lockdowns were lifted in some locations, including Shanghai, retail sales rebounded in June, up 3.1 percent year over year. Additionally, the unemployment rate decreased from 5.9 percent in May to 5.5 percent.
Due to considerable employment insecurity, consumer sentiment remained precarious.