China on Tuesday suspended the monthly publication of its detailed youth unemployment figures, which had hit a record high in recent months, following another round of disappointing economic indicators for the July recovery plan in the world’s second-largest economy, whose state of The health of the gigantic real estate sector worries the markets.
Activity has been particularly penalized in recent months due to the setbacks of various developers and their astronomical over-indebtedness, the drop in consumer confidence and the global economic slowdown, which is weighing on demand for Chinese products and therefore activity . Last month, the unemployment rate for the active population as a whole increased slightly compared to June to 5.3%.
China decided on Tuesday to stop publishing detailed figures for 16-24 year olds, after a record high in June in the world’s second-largest economy (21.3%). “The publication of the youth unemployment rate is suspended,” Fu Linghui, spokesman for the National Bureau of Statistics, told reporters. In China, the unemployment rate is calculated for urban areas only and therefore provides only a partial picture of the situation.
The recovery is running out of steam
In this context, retail sales, the main indicator of household consumption, only increased 2.5% year-on-year last month, according to official figures from the National Bureau of Statistics (BNS). Analysts surveyed by the Bloomberg agency expected an acceleration (3.6%), after an increase of 3.1% in June of this index closely followed by the markets.
This level is far from that of April (+18.4%) when retail sales had achieved their highest growth of the year, then galvanized by the post-Covid recovery and the return of the Chinese to the main leisure venues (restaurants, solar tourism, shopping malls, etc.). Now, in a sign the recovery is petering out, lending to households fell last month to its lowest level since 2009, according to figures released Friday.
To support activity, China’s central bank cut a benchmark rate for medium-term loans on Tuesday, raising its interest rate on one-year loans to financial institutions (MLFs) to 2.50%, from 2.65%. former. This measure makes it possible to reduce the financing costs of commercial banks to encourage them to grant more credit, under more favorable conditions.
Industrial production also slowed down in July (+3.7% year-on-year), compared to 4.4% in the previous month. Analysts anticipated a more moderate drop (4%). For its part, investment in fixed capital slowed down to +3.4% annually during the first seven months of the year. This is its weakest growth rate since 2020. This indicator reflects spending on real estate, infrastructure, equipment and machinery, sectors that the government has relied on in the past to stimulate activity.
turmoil in real estate
The bad numbers on Tuesday come as markets scrutinize the real estate sector, which along with construction has long accounted for a quarter of China’s GDP. One of the biggest promoters in the country, Country Garden, has been in the spotlight for the past few days. With a longstanding reputation for financial strength, the group last week was unable to pay two interest repayments on loans. You have a 30-day grace period and risk default in September if you don’t pay.
This situation makes the markets nervous because Country Garden estimated its debt at around 1,152 million yuan (150,000 million euros) at the end of 2022. An abysmal amount, which the Bloomberg agency considers much higher, around 1,400 million yuan. (176,000 million euros). euro).
Source: BFM TV
