China's economy remains on shaky ground
New figures from China offer no signs that the state's ailing economy is poised for a turnaround. A central issue remains consumption. While Beijing announces measures, observers are not convinced.
China's economy is not gaining momentum. As reported by the Beijing Statistics Bureau, the recovery of the world's second-largest economy continues to be unbalanced. Industrial production in July increased by 5.1 percent year-on-year, less than analysts had expected on average. Meanwhile, retail sales, an indicator of household consumption, rose by 2.7 percent compared to the previous year, slightly better than expected by a Bloomberg survey. However, overall consumption growth remained low.
Urban unemployment rose to 5.2 percent, slightly higher than expected. Figures released earlier this month had already indicated a weak start to the third quarter. Notably, China's export growth slowed unexpectedly in July, a key driver of growth.
Citizens hold onto money
The People's Republic has been grappling with a range of economic issues for some time. Consumption is sluggish as many Chinese prefer to save for uncertain times. Many families are particularly concerned about the ongoing crisis in the real estate market and high unemployment. Especially young people are struggling to find work.
The government has pledged support for the real estate sector and aims to boost consumption to achieve the targeted growth rate of five percent by the end of the year. However, observers are skeptical that the announced measures will quickly improve sentiment.
In a statement on the new data, the Beijing Statistics Bureau described the economic situation as "generally stable". However, it acknowledged that "the ongoing economic recovery continues to face numerous difficulties and challenges". The negative impacts of the external environment are increasing, and domestic demand remains insufficient.
Despite the government's efforts to boost consumption, high unemployment remains a concern among the population. Unemployment rates, particularly among young people, are affecting their ability to consume, contributing to the overall slowdown in China's economy.
