Problems in the Chinese economy are growing – Breaking economic news – Spokesperson
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Data on economic activity in China gave alarm, debt problems in the real estate sector continued. The yuan fell against the dollar as the central bank cut interest rates. The National Bureau of Statistics did not share statistics on high youth unemployment.
ChineseIndicators for July show that the country’s economy continues to have difficulties in rallying after Covid-19 in many areas, including production, consumption, investments and employment.
The National Bureau of Statistics (UIB) announced the data set consisting of industrial production, retail sales and unemployment figures covering the month of July and the first 7 months in the country.
Accordingly, while large industrial production increased by 3.7 percent in July compared to the same period of the previous year, it fell behind the increase of 4.4 percent in June. Retail sales, which are considered a measure of consumption, increased 2.5 percent annually in July, outperforming the 3.1 percent increase in June.
CENTRAL BANK LOWERS INTEREST, YUAN LOWER
China also cut one-year interest rates by 15 basis points to support economic activity, making it the biggest rate cut since the beginning of the Covid epidemic. The yuan hit a nine-and-a-half-month low as economic vulnerabilities increased.
China’s major state-controlled banks have intervened in the spot market to pacify the yuan’s move, sources told Reuters. dollar versus 7.2743.
THE PROBLEM IS GROWING IN THE REAL ESTATE SECTOR
On the other hand, while concerns about the debt problems of China’s largest private real estate development company could put pressure on homebuyers and financial institutions, there was uneasiness in the markets, while the forecasts for a recovery in the sector and the economy in the near future weakened considerably.
The real estate sector, which is one of the foundations of the Chinese economy, was already going through a difficult time as sales declines, liquidity tightness and a number of real estate development companies have defaulted since 2021.
Chinese real estate development company Country Garden’s debt problems have deepened with the cessation of trading on its domestic bonds. Problems in the real estate sector have raised concerns about the economic recovery.
Pressure is mounting for authorities to rebuild confidence in the economy amid concerns that more real estate companies could be on the brink of bankruptcy without financial support.
“If policy support is not increased soon, the economy risks going into a recession,” Capital Economics analyst Julian Evans-Pritchard said in a note to investors.
Robert Carnell, head of research for Asia-Pacific at ING, said in a note, “The market was hoping the Bank of China would wait until September before easing monetary policy again. “Today’s cuts show that officials are increasingly concerned about the state of the macroeconomy,” he said.
YOUTH UNEMPLOYMENT NUMBERS NOT ANNOUNCED
While the unemployment rate in urban areas increased by 0.1 points to 5.3 in July compared to the previous month, the National Bureau of Statistics did not disclose the unemployment figures by age groups, including the high youth unemployment figures, on the grounds that “work statistics need to be improved”.
Unemployment in the youth population aged 16-24, which has been high in the country since the beginning of the Covid-19 epidemic, reached its highest level since the 1990s, rising by 21.3 percent in June.
The suspension of publishing youth unemployment figures instantly became a trend on Chinese social media platform Weibo. Some users reacted to the Chinese Bureau of Statistics. (AA, REUTERS, SPEAKER)
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