China’s economy continues to slow down, increasing the need for additional countermeasures
2023-07-19
■ In June, China's main economic indicators, mainly household consumption, showed a sustained slowdown in the economy.
■ The sluggish domestic demand and real estate market suggest the need for additional measures, and the judgment of the Central Politburo meeting has received much attention.
Yesterday, China's main economic indicators were released, and as of June, the economic indicators were roughly all released. The actual GDP growth rate from April to June (6.3% year-on-year, 0.8% year-on-year), although the growth rate has accelerated due to last year's urban lockdown, the fundamental effect of the government's target has accelerated (at an annual rate of around 5%). In June, only industrial production (increased by 4.4% year on year) strengthened its growth, and many indicators such as retail sales (increased by 3.1% year on year), fixed assets investment (increased by 3.8% year on year except in rural areas), and exports (decreased by 12.4% year on year) deteriorated further than last month. Since May, production activity has rebounded, but overall, economic activity has remained sluggish, mainly due to retail sales (household consumption).
In terms of price indicators, the consumer price index (unchanged year-on-year) slowed down, the producer price index (down 5.4% year-on-year) continued to decline, and the pressure of price decline caused by insufficient demand increased. In response to the sluggish economy and prices, the People's Bank of China (PBOC) implemented the Medium-Term Loan Facility (MLF) interest rate and lowered the Loan Prime Rate (LPR) in June. However, the depreciation of the RMB in the foreign exchange market has become a constraint on the promotion of monetary easing policies, and the LPR, as the benchmark interest rate for bank loans, has only slightly decreased. The Money supply of BOC Money supply (up 9.8% year on year) has accelerated in the past two months, while the Money supply (M2, up 11.3% year on year) and the total balance of social financing (up 9.0% year-on-year) of the city's money circulation continue to slow down, and the economic floating effect is limited. In addition, the real estate market has once again strengthened the adjustment of colour, which is supported by policies. The decline in real estate sales (based on floor area, a year-on-year decrease of 5.3% at the beginning of the year) has expanded, and the increase in new house prices (calculated by Refinitiv, unchanged) in 70 major cities has decreased.
On July 10, the PBOC and the National Administration of Financial Regulation announced the extension of some of the financial support policies for real estate developers, including the extension of the repayment period of some loans, lending support, etc. The Central Political Bureau meeting scheduled for this month is expected to formulate guidelines for the operation of economic policies in the second half of the year. In the face of insufficient domestic demand and the difficulties faced by real estate developers, the need for additional measures has been hinted at. The attitude of the government leadership towards "economic stability" proposed in this year's economic goals has been questioned, and that content has been given attention.
■ The sluggish domestic demand and real estate market suggest the need for additional measures, and the judgment of the Central Politburo meeting has received much attention.
Yesterday, China's main economic indicators were released, and as of June, the economic indicators were roughly all released. The actual GDP growth rate from April to June (6.3% year-on-year, 0.8% year-on-year), although the growth rate has accelerated due to last year's urban lockdown, the fundamental effect of the government's target has accelerated (at an annual rate of around 5%). In June, only industrial production (increased by 4.4% year on year) strengthened its growth, and many indicators such as retail sales (increased by 3.1% year on year), fixed assets investment (increased by 3.8% year on year except in rural areas), and exports (decreased by 12.4% year on year) deteriorated further than last month. Since May, production activity has rebounded, but overall, economic activity has remained sluggish, mainly due to retail sales (household consumption).
In terms of price indicators, the consumer price index (unchanged year-on-year) slowed down, the producer price index (down 5.4% year-on-year) continued to decline, and the pressure of price decline caused by insufficient demand increased. In response to the sluggish economy and prices, the People's Bank of China (PBOC) implemented the Medium-Term Loan Facility (MLF) interest rate and lowered the Loan Prime Rate (LPR) in June. However, the depreciation of the RMB in the foreign exchange market has become a constraint on the promotion of monetary easing policies, and the LPR, as the benchmark interest rate for bank loans, has only slightly decreased. The Money supply of BOC Money supply (up 9.8% year on year) has accelerated in the past two months, while the Money supply (M2, up 11.3% year on year) and the total balance of social financing (up 9.0% year-on-year) of the city's money circulation continue to slow down, and the economic floating effect is limited. In addition, the real estate market has once again strengthened the adjustment of colour, which is supported by policies. The decline in real estate sales (based on floor area, a year-on-year decrease of 5.3% at the beginning of the year) has expanded, and the increase in new house prices (calculated by Refinitiv, unchanged) in 70 major cities has decreased.
On July 10, the PBOC and the National Administration of Financial Regulation announced the extension of some of the financial support policies for real estate developers, including the extension of the repayment period of some loans, lending support, etc. The Central Political Bureau meeting scheduled for this month is expected to formulate guidelines for the operation of economic policies in the second half of the year. In the face of insufficient domestic demand and the difficulties faced by real estate developers, the need for additional measures has been hinted at. The attitude of the government leadership towards "economic stability" proposed in this year's economic goals has been questioned, and that content has been given attention.