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China’s economy is facing increasing pressure as industrial output, retail sales, and investment all slowed in August 2024. The latest data shows a weakening economy, prompting calls for stronger government intervention.
Industrial output grew by just 4.5% year-on-year in August, the lowest rate since March. This was a drop from July’s 5.1% growth, and below 4.8% growth forecast by analysts in a Reuters poll.
Retail sales, a key indicator of consumer spending, rose only 2.1% in August, down from 2.7% in July. This slowdown came despite the summer holiday season, when spending usually picks up.
Economists say these figures highlight weak domestic demand.
China’s property market remains a significant drag on the economy. Real estate investment fell 10.2% in the first eight months of 2024, continuing a prolonged slump. Home prices dropped at the fastest rate since 2014. Only two of 70 cities surveyed reported increases in home prices in August.
Fixed asset investment also grew at a slower pace. Between January and August, it increased by 3.4%, down from the 3.6% recorded for the first seven months of the year.
The country’s job market is under strain as well. The urban unemployment rate rose to 5.3% in August, the highest since February. A surge in new college graduates entering the job market contributed to the rise.
According to The Financial Times, Raymond Yeung, chief economist for Greater China at the Australia and New Zealand Banking Group, suggested that China’s final growth figure could fall short of the official target by as much as 0.4 to 0.5 percentage points. Yeung believes that this will likely This will likely prompt the authorities to release a stimulus package,” he wrote in a report.
Time is running out for Chinese policymakers. With just a few months left in the year, there are growing concerns that more aggressive measures are needed to stabilize the economy.
China’s government has so far implemented incremental measures, including cutting interest rates and easing restrictions on home buying.
In the coming weeks, many expect the People’s Bank of China to introduce further monetary easing. This could include lowering the amount of cash banks are required to hold in reserve.