2023-06-15 04:06:14
The long-awaited post-Covid recovery after the lifting of health restrictions at the end of 2022 has tended to run out of steam in the world’s second largest economy in recent weeks, while it is struggling to materialize in certain sectors.
New official figures published Thursday by the National Bureau of Statistics (BNS) confirm this trend.
Last month, one in five young Chinese was thus unemployed, a rate of 20.8% and a new record in the Asian country.
This rate, which concerns 16-24 year olds, has continued to rise in recent months and had already reached 20.4% in April. The rate for the working population as a whole, on the other hand, was unchanged over one month (5.2%).
In China, unemployment is calculated for urban areas only and therefore provides only a partial picture of the situation.
For their part, retail sales, the main indicator of household consumption, experienced a setback in May.
This indicator, which is closely followed by the markets, rose last month by 12.7% over one year, but at a rate much lower than that of April (18.4%).
Analysts polled by the Bloomberg agency expected a more moderate slowdown (13.7%), despite the return of customers to shopping centers and restaurants since the lifting of health restrictions in December.
Rate cut
Weak domestic demand, despite virtually zero inflation, is also holding back the recovery.
Industrial production also slowed in May (+3.5% over one year).
It had further increased by 5.6% a month earlier, when factories were gradually returning to full capacity.
Analysts had anticipated this decline.
For its part, investment in fixed assets slowed down, posting an increase of 4% over one year over the first five months of the year (against 4.7% previously).
This is an indicator of spending on real estate, infrastructure, equipment or machinery, sectors on which the government has relied to stimulate activity.
The government is targeting “about 5%” growth this year, a rate that would be one of the weakest in decades for the Asian giant.
To support growth, the Chinese central bank on Thursday lowered a benchmark rate for medium-term loans.
“Growing Concern”
The decision makes it possible to reduce the financing costs of commercial banks to encourage them to grant more credit on more favorable conditions and thus to support the economy.
The interest rate for one-year central bank loans to financial institutions (MLF) is reduced to 2.65% from 2.75% previously.
This reduction “will not make a big difference” but it “reflects the growing concern of policymakers about the health of the economic recovery”, notes analyst Julian Evans-Pritchard, of the firm Capital Economics.
It nevertheless makes it possible to inject 237 billion yuan (30.6 billion euros) into the economy, according to the central bank which had already reduced its short-term key interest rate on Tuesday to the surprise of analysts.
The recovery in China remains “fragile” and it remains conditional on the “support” of the public authorities, estimated Wednesday the World Bank, at a time when some economists are pleading for a recovery plan to stimulate growth.
“For the economic recovery to be sustainable, a significant boost from the government is needed,” said economist Zhiwei Zhang of Pinpoint Asset Management.
But the authorities seem to rule out this option for the time being.
The economy remains handicapped by the over-indebtedness of the real estate sector (a traditional driver of growth), sluggish consumer confidence and the global economic slowdown which is penalizing demand for Chinese goods.
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