China’s retail sales and industrial production grew in July, year on year, but missed analysts’ predictions by significant amounts, showing the impact of the nation’s real estate crisis and massive zero-COVID policy lockdowns. These trends were forecast in previous Trends Journals and again reported in this issue.  

Retail sales expanded 2.7 percent in the month, according to the National Bureau of Statistics, far from the 5 percent economists had expected and slower than June’s 3.1-percent growth.

While catering, furniture sales, and sales of construction materials all declined, sales were up among autos and general merchandise, with precious metals and jewelry rising the most, shooting up by 22.1 percent.

Online sales were up 10 percent, year on year.

Factory output expanded by 3.8 percent, edging down from 3.9 percent in June and falling well short of analysts’ forecasts of 4.6 percent.

Investments in real estate fell in July, while investments in manufacturing grew more slowly than in June. 

“Real estate investment has declined, and may have had some impact on related consumption,” Fu Linghui, a statistics bureau spokesman, said in comments quoted by CNBC.

Industrial investment rose by 5.7 percent in July, year over year, from a year ago, short of observers’ 6.2-percent forecast.

Urban unemployment decreased in July, but the jobless ranks of young people ages 16 to 24 set a record at 19.9 percent. 

The country’s service sector, which normally employs more young people than manufacturing, is recovering more slowly, Fu noted.

Stable jobs in China typically include those at state-owned enterprises rather than positions at start-ups or smaller companies.

“The national economy maintained the momentum of recovery,” the statistics bureau said in a statement, but warned of a rising global risk of stagflation.

“The foundation for the recovery of the domestic economy is yet to be consolidated,” the agency said.

The one area of China’s economy that did best analysts’ predictions was exports, which rose 18 percent in value in July, year over year, to $332.9 billion, the country’s General Administration of Customs reported.  

Economists The Wall Street Journal had surveyed predicted a median increase of 15.9 percent.

TREND FORECAST: Much of the world still depends on Chinese exports. The percentage increase is double the inflation rate in the U.S. and Eurozone, indicating that China’s export economy remains resilient even if its domestic economy continues to falter.

However, with tensions heating up between China and the United States, Japan and Europe over the issue of Taiwan, should a military confrontation erupt, those nations will do all they can to pull away from Chinese imports. Indeed, this may be part of their strategy to make enemies with China so they can become more self-sufficient nations and make what they need rather than buying it abroad. 

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