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Although still on the uptrend, the recovery of the Chinese economy slowed in July. Domestic retail sales in China increased 8.5% from a year ago, below expectations and signaling a further potential decline as the outbreak of the Delta variant virus escalates .
Even though the Asian giant’s retail sales missed consensus analysts’ forecasts for July (11.4% growth), the numbers were still above 2019 levels, according to data from Yahoo Finance. Indeed, total sales of consumer goods in July increased 7.2% compared to the same period two years ago.
In July, clothing sales in China rose 7.5%, while jewelry sales improved 14.3%. Online retail sales, which account for 23.6% of total retail sales, increased 17.6% year-on-year. For the first seven months of the year, total sales increased 20.7% year-on-year.
Commenting on the numbers in a market note, ING Bank’s chief economist for Greater China, Iris Pang, warned that “we see few positive factors for the economy, instead we see more risk factors”. She detailed some of the most pressing threats to the recovery of the Chinese economy: “There have been more floods in China. The Delta COVID-19 variant is spreading across the continent, although the number of cases remains below 200 per day. Strict social distancing measures have affected the ports of Ningbo and Shanghai, which are close to each other … Strict social distancing measures also limit the flow of people around the continent, which limits leisure travel and travel. household expenses during summer vacation.
China’s industrial production and retail sales fell sharply in July
The impact of new coronavirus variants and extreme weather conditions hampered output at Chinese factories and retail sales growth in early summer. As a result, these indicators fell sharply and exceeded expectations in July, suggesting that the country’s economic recovery has stalled.
Chinese industrial production rose 6.4% year-on-year in July, data from the National Bureau of Statistics show. This increase missed analysts’ expectations for a 7.8% increase in July. Meanwhile, retail sales rose 8.5% year-on-year, again behind the estimated increase of 11.5%.
China’s slowing economy is slowing global stock exchange
On a related note, online sales of physical consumer goods rose 4.4% in July, well below an average of around 21% over the past five years, according to CNBC’s calculations of the data. official. This sharp drop was in part due to massive trade promotions in June, which were followed by logistical disruptions amid Covid-19 travel restrictions, floods and typhoons in July, explained Bruce Pang, research manager. macro and strategic at China Renaissance. In June, Alibaba and JD.com managed a record combined sales of $ 136.51 billion in the big June 18 business event known as “618.”
In the wake of China’s economic update, weak global stock market trading highlights growing market unrest over slowing growth in this Asian country, the world’s second-largest economy. “Asia’s low vaccination rates and low tolerance for community spread suggest that it is the region most economically at risk for the Delta variant,” economist Bruce Kasman told Reuters JPMorgan. He added that “China is in the process of removing political support, which seems likely to dampen domestic demand growth and weigh on regional performance until the end of the year. With these growing brakes in recent weeks, we have lowered regional growth forecasts to 2H21. “
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