Economic recovery stays on track in July
China’s central bank cut key lending rates in a surprise move yesterday even as the economy maintained its recovery trend in July with major economic indicators posting steady growths despite domestic COVID-19 outbreaks and heatwaves.
China’s value-added industrial output went up 3.8 percent year on year in July and 0.38 percent over June, data from the National Bureau of Statistics showed yesterday.
Among the three major sectors, the production and supply of utilities showed the fastest growth of 9.5 percent year on year during the period, outpacing that of the mining and the manufacturing sectors.
The country’s retail sales of consumer goods climbed 2.7 percent annually last month, with sales of consumption-upgrading goods like jewelry and household appliances expanding fast.
In the first seven months, China’s total retail sales of consumer goods stood at 24.63 trillion yuan (US$3.64 trillion), down 0.2 percent on year.
China’s home prices in 70 large and medium-sized cities displayed a generally stable trend in July, according to NBS data.
New home prices in four first-tier cities — Beijing, Shanghai, Shenzhen and Guangzhou — edged up 0.3 percent month on month in July.
New home prices in 31 second-tier cities stayed flat month on month, while 35 third-tier cities saw a monthon-month decline of 0.3 percent, the same level as that in June.
Last month, 40 out of the 70 cities saw a month-on-month drop in new home sales prices, the data showed.
“The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“The People’s Bank of China is already responding to these headwinds by stepping up support.”
Other major economic indicators, including the index of services production and fixed-asset investment, also posted year-on-year growths, the NBS data showed.
China’s fixed-asset investment went up 5.7 percent year on year in the first seven months of this year.
Fixed-asset investment from January to July totaled 31.98 trillion yuan, the NBS said in a statement.
The growth slowed from the 6.1 percent increase posted in the first half of this year. In July, fixed-asset investment picked up 0.16 percent from June.
Thanks to the steady economic recovery, the country’s surveyed urban unemployment rate continued to drop in July, down from 5.5 percent in June to stand at 5.4 percent last month.
In the first seven months of the year, 7.83 million new urban jobs were created, according to the NBS.
The continued economic recovery in July didn’t come by easily as the country had to deal with sporadic domestic COVID-19 flare-ups and high temperatures in many regions, NBS spokesperson Fu Linghui told a press conference in Beijing yesterday.
Fu pointed out that the Chinese economy’s upgrading and transformation also pressed ahead.
In July, the output of new-energy vehicles and solar cells rose 112.7 percent and 33.9 percent year on year, respectively.
In the January-July period, the added value of high-tech manufacturing increased 9 percent year on year, and investment in high-tech industries climbed 20.2 percent.
“However, the economy is still in the process of recovery with the insufficient market demand as a big constraint,” Fu said, adding that the foundation for economic recovery needs to be consolidated.
To prop up growth, the PBOC, the country’s central bank, yesterday unexpectedly lowered interest rates on key lending facilities for the second time this year.
Analysts believe that the cut is likely to lead to a corresponding reduction in benchmark lending rates next week.
Newly added social financing, a measurement of funds that individuals and non-financial firms receive from the financial system, came in at 756.1 billion yuan last month, down 319.1 billion yuan from the same period last year, data from the central bank showed.
Fu expected household consumption to gradually recover with more sophisticated pandemic prevention and control and pro-consumption policies.
In particular, the preferential policies for automobile and home appliance consumption will drive the sales growth of big-ticket items or bulk commodities.
As the blocking points of the industrial and supply chains are gradually being addressed, key industries such as automobiles are resuming normal production, which will continue to play a supporting role in China’s industrial growth.
“With joint efforts, the economic recovery momentum is expected to sustain,” Fu said.
However, the economy is still in the process of recovery with the insufficient market demand as a big constraint.
Fu Linghui Spokesperson of the National Bureau of Statistics