Last month, economic activity picked up in China’s retail and travel industries as well as at computer chip and smartphone factories, the National Bureau of Statistics (NBS) has reported.

Semiconductor production jumped 21.1 percent last month, year on year, the NBS said. Overall industrial output was up 4.5 percent after the country’s economic deflation was factored in.

Retail sales grew by 4.6 percent, likely because of rising energy prices, Nomura bank analysts said.

The government had pledged bold moves to revive China’s moribund economy.

However, “a series of small steps, including two rounds of interest-rate cuts, seems to be yielding a slightly better-than-expected improvement in the country’s economy,” The Wall Street Journal said. 

Investment in fixed assets—some in manufacturing but mostly in public spending on more infrastructure projects—rose by 3.2 percent in August, compared to 3.4 percent in July.

“The national economy has accelerated its recovery,” NBS director Fu Linghui proclaimed in a public statement accompanying the report.

Not all foreign analysts were ready to agree.

“Some may be of the view that China’s economy has bottomed out but we remain cautious,” Nomura’s analysts wrote in a note.

The country’s real estate crisis has yet to be resolved. Cities of half-built apartment blocks still stand half-finished. That has discouraged home buyers, with property investment in August down 20 percent year on year. Home prices fell at an annual pace of 2.9 percent in August, compared to a decline of 2.6 percent in July. 

Home prices in 100 large cities were off 14 percent last month compared to their peak in summer 2021, according to the Beike Research Institute. Rents have slipped 5 percent.

The property mess has spilled into the banking industry, with many banks having lent to developers that have defaulted or are in arrears.

Because of the country’s overall weakness, demand for new bank loans of all kinds have fallen.

To ease the banking crisis, last week the country’s central bank cut the amount of cash reserves banks need to hold against loan losses. The change is in aid of a large batch of bonds that local and regional governments are going to sell to fund infrastructure projects.

TREND FORECAST: China’s economy has not begun a long-term, broad-based recovery. It was essentially destroyed by Beijing’s three year COVID War that destroyed the lives and livelihoods of hundreds of millions across the nation.

Much of the spending is by governments, continuing the country’s habit of growing the economy by spending on public construction projects. The weaknesses in housing, lending, consumer spending, and employment have yet to be resolved.

China’s economy will show blips of improvement in some sectors but it will be years at the very least before the country can claim an economy firing on all cylinders. As we have greatly detailed in recent Trends Journals, with the global economy slowing down, so too are China’s exports which will in turn drag down its GDP.