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China: Industrial production and retail sales decline

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China industrial production and retail sales growth slowed in July, highlighting the pressure on the economy as export strength erodes and Covid-19 resurgence disrupts activity.

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According to official statistics released on Monday, industrial production increased by 6.4% on an annualized basis in July, below the consensus estimate of +7.8%, following a 6.3% jump in June.

Although China has recovered from the initial effects of the Covid-19 outbreak to pre-crisis levels, the rebound appears to be slowing as companies deal with rising costs and supply chain disruptions.

According to China’s 4th National Economic Census, at the end of 2018, the number of workers in manufacturing companies in China was 147.13 million, or 27.32% of all workers. This is a decrease of 7.83 percentage points from the end of 2013.

According to industry experts, China’s manufacturing industry is characterized by wide disparities in regional development, resulting in an imbalanced reduction of labor force.

Additionally, it was mentioned that the number of workers in industries such as ferrous metal smelting, textile industry, leather, footwear and chemical raw materials has decreased by more than 25% in the past five years since 2013. According to the report, large-scale unemployment could be avoided through inter-regional and inter-industry distribution methods, and the unemployment rate of the national urban survey could be maintained at 5%.

Meanwhile, the increase in Covid-19 cases in July prompted authorities to impose containment measures and suspend business operations in some areas.

China’s export growth, one of the catalysts for the country’s economic rebound from a health crisis-related low in early 2020, softened in July, according to official data released earlier this month.

Retail sales rose 8.5% year-over-year last month, but analysts had expected an 11.5% increase after +12.1% in June.

Following outbreaks of Covid-19 in several cities, China has tightened health restrictions, affecting the service sector.

For MetaNews.

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Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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