China’s economic recovery falters as Delta outbreak, Henan floods add to fears of second half slowdown

Name: Mass Covid-19 testing under way across China amid rising infections fuelled by Delta variant
Uploaded: 2021-08-16T12:00:12.000Z
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Description: Mass Covid-19 testing under way across China amid rising infections fuelled by Delta variant

The broad-based slowdown across key indicators in July will add to a gloomy outlook in the second half of the year

Retail sales and industrial production grew by 8.5 per cent and 6.4 per cent, respectively, in July from a year earlier

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Retail sales and industrial production grew by 8.5 per cent and 6.4 per cent, respectively, in July from a year earlier. Photo: EPA-EFE

Su-Lin TanandOrange Wang

Published: 8:00pm, 16 Aug 2021Updated: 9:26am, 17 Aug 2021

The Chinese economy continued to lose steam in July as key economic data for the start of the third quarter fell short of expectations, although not all economists have leapt to trim their full-year growth forecasts, with some saying there is still room for further monetary easing.

With more headwinds likely in the second half of the year, last month’s data presages the possibility of a deeper slowdown in months to come, especially as sporadic Delta outbreaks continue to flare across China.

Soon after the July figures were released by the National Bureau of Statistics (NBS) on Monday a number of foreign banks revised down their gross domestic product (GDP) growth forecasts for the year.

Retail sales, a key measurement of consumer spending, grew by 8.5 per cent in July, down from the 12.1 per cent increase in June, and below the projection for a 10.9 per cent rise estimated in the Bloomberg survey.

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Mass Covid-19 testing under way across China amid rising infections fuelled by Delta variant

China’s industrial production – a gauge of activity in the manufacturing, mining and utilities sectors – also slowed, growing at 6.4 per cent in July from a year earlier, after increasing by 8.3 per cent in June.

Fixed-asset investment – a gauge of expenditure on items including infrastructure, property, machinery and equipment – grew by 10.3 per cent in the January-July period compared with a year earlier, lower than the 12.6 per cent between January and June.

The surveyed jobless rate, an imperfect measurement of unemployment in China which does not include figures for the tens of millions of migrant workers, stood at 5.1 per cent in July from 5 per cent in June.

The combined impact of the latest Covid-19 outbreak in China, which has spread to at least 17 provinces, and natural disasters such as the Henan floods helped make the economy’s performance “unstable and uneven”, the NBS said.