BEIJING (BLOOMBERG) – China’s economy slowed further last month, dragged down by a worsening property market slump and disruptions from repeated Covid-19 outbreaks.
Growth in fixed asset investment eased to 5.2 per cent in the first eleven months of the year. Property investment grew 6 per cent in the same period, slowing from 7.2 per cent during the January-October period, as financing rules remained strict and home sales plunged.
Industrial output rose 3.8 per cent from a year earlier, quickening from 3.5 per cent in October and above the 3.7 per cent projected by economists. Retail sales growth weakened to 3.9 per cent, missing economists’ forecasts of a 4.7 per cent gain.
Sales in the restaurant and catering sector dropped 2.7 per cent, as people stayed home amid renewed virus outbreaks.
The data highlights the downward pressure on the economy from the real estate sector and the scale of the challenge facing the Chinese government in stabilising the world’s second-largest economy.
While Beijing is expected to make more credit available and signalled some easing of controls on the property market to support “stability”, officials last week maintained the basic stance that “houses are for living in, not speculation”.
The economy’s slowdown has prompted Beijing to shift its focus to stabilising growth, with the central bank easing monetary policy and the Communist Party ordering more fiscal spending next year.
Earlier on Wednesday, the central bank kept the interest rate for one-year loans to banks unchanged and only rolled over about half of the maturing debts, withdrawing liquidity from the economy.
However, a recently announced cut to the reserve requirement ratio for banks takes effect from Wednesday, which will increase the amount of money financial institutions have on hand to lend.
“The international environment is increasingly complex and grim and there are still many constraints on the domestic economic recovery,” the National Bureau of Statistics said in a statement. We must “combine the cross-cyclical and counter-cyclical macro policy adjustments so as to stabilise the overall macro economy”.
Infrastructure investment, another weak link in China’s slow recovery this year, rose at a slower pace of 0.5 per cent. Local governments have stepped up efforts to borrow money and start new projects and Beijing has allowed authorities to start selling next year’s bonds from Jan 1 to speed up spending.
Consumption weakened despite support from still strong sales around the “Singles Day” shopping festival, which did not help offset the impact of the outbreaks of Covid-19 on consumption of services, restaurant and catering sales, as well as purchases at physical shops.
The surveyed jobless rate inched up to 5 per cent while the average number of hours worked per week fell to 47.8 from the record 48.6 in October. The unemployment rate of those aged 16 to 24 rose slightly to 14.3 per cent from 14.2 per cent.
“Domestic consumption remains weak with retail sales disappointing,” said Dr Raymond Yeung, chief economist for Greater China at Australia and New Zealand Banking Group. “The incremental increase in the jobless rate is concerning. The authorities should pledge more support and offer a stronger signal to the market.”
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