China’s retail sales, factory activity lagged in July

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China’s retail sales and factory activity grew at a slower pace in July, official data showed on Monday, missing forecasts and highlighting persistent pressure on the world’s second-largest economy.

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The country’s leaders have battled sluggish spending in the domestic economy since the end of the Covid-19 pandemic as it threatens overall growth, even as exports and certain high-tech sectors boom.

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Beijing is targeting national growth of 4.5-5.0 percent this year, the lowest official goal in decades, but the economy fell short of that in the second quarter.

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Data released Monday by the National Bureau of Statistics showed retail sales grew 0.6 percent in July, well below the 1.5 percent forecast in a Bloomberg survey and down from the one percent increase seen in June.

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The NBS figures also showed industrial production growth slowed to 4.5 percent on-year in July — down from 5.3 percent the month before and short of the five percent forecast in the Bloomberg survey.

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“In July, international geopolitical conflicts persisted and the global energy market was characterised by significant instability and uncertainty,” said NBS spokesman Fu Linghui at a news conference Monday.

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Also noting the impact of severe weather last month in some Chinese regions, Fu said authorities had “actively addressed internal and external risks and challenges”.

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In another sign of the challenges facing the government, fixed-asset investment in January-July fell 6.7 percent on year, the NBS said.

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“The weak economic data indicate that the economy faces further downside risks that require more effective policy response,” wrote Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management.

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“The Politburo meeting in late July promised stronger fiscal spending but the implementation and transmission likely takes time,” said Zhang.

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Many economists contend that China must shift towards a growth model driven more by household spending than the traditional engines of past decades, including real estate and infrastructure investment.

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Trade data for July released this month showed exports and imports soaring, boosted by increased overseas demand for AI-related tech products.

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The surge in exports has helped China’s vast manufacturing sector through the prolonged slump in domestic spending.

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AFP

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