China’s factory activity continued weak in June, although less so than in April and May, government figures showed. Exports shrank in May at an annual rate of 7.5 percent.

Also in June, the country’s service economy notched its slowest month since Beijing lifted its strict anti-COVID measures last November.

The purchasing managers index (PMI) for manufacturing in June was 49.0, up from 48.8 in May. The subindex gauging new orders was 48.6, while the export subindex sank to a five-month low of 46.4.

Readings below 50 indicate economic contraction. 

The services sector’s PMI registered 53.2 last month, compared to 54.5 in May, but fell short of economists’ expectations. 

Construction’s PMI was 55.7, still signaling expansion but at its slowest this year due to lingering troubles in the property sector.

A subindex measuring employment shrank for the fourth consecutive month, settling at 48.2. Service-sector employment shrank for the fourth consecutive month, sinking to 46.8.

The overall PMI combining goods and services edged down to 53.2 in May from 53.9 in April.

In May, joblessness among people ages 16 through 24 reached a record 20.8 percent.

“It is not clear if the weak economic data would push the government to launch aggressive stimulus measures soon,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, told Reuters.

Since China’s post-COVID economic recovery flopped in the second quarter, Beijing has reportedly been considering a range of stimulus options, which we detailed in “Will Beijing’s New Stimulus Measures Rescue China’s Floundering Economy?” (20 Jun 2023). 

As of 30 June, the central bank had cut interest rates for some loans but done little else.

The politburo, the government’s elite group of policymakers, is scheduled to meet this month and is likely to discuss “a more comprehensive package” of stimulus steps, Citi analysts wrote in a note.

Analysts have cut their forecast for China’s economic growth this year, but those predictions have generally remained above China’s own 5-percent target.

TREND FORECAST: The damage that Beijing inflicted upon its nation with its three years of zero-COVID policy following their launching of the COVID War in January 2020 on its Chinese Lunar New Year, The Year of the Rat, has devastated the lives and livelihoods of hundreds of millions of its citizens.

The businesses that have gone out of business will not come back. And although Beijing will launch a flurry of stimulus measures, they will be piecemeal and not blunt their collective impact of the economic decline. In fact, it will take years to economically recover. 

Also, China’s economic problems are structural as well as policy-related: the number of elderly is increasing, the number of working-age adults is decreasing, and the culture has a deeply ingrained bias toward thrift instead of spending… and youth unemployment is over 20 percent. 

Again, even with a broad stimulus package, China’s economy will need at least a year to show significant improvement. The odds are that a meaningful recovery will take much longer than that.

Moreover, China’s economy exploded following their joining the World Trade Organization in 2001, and as with all booms, they are followed by busts since greed and over-expansion have no sound limits. 


In 13 major Chinese cities, including Beijing, Guangzhou, Hangzhou, and Shanghai, the number of homes listed for sale jumped 25 percent in this year’s first five months. In Shanghai, the figure was 82 percent and 72 percent in Wuhan, research service E-House China Research and Development Institution reported.

In May, just 15 of China’s 70 leading cities saw home prices rise; in April, the number was 36, the National Bureau of Statistics said.

Some sellers are re-establishing themselves after the COVID War, planning for children, moving to take a new job, or undertaking a similar activity that required changing locations.

Others told researchers they face financial hardships or they think the real estate market will continue to weaken and they want to cash out of their properties now before things get even worse.

In February, home sales surpassed 2019 levels as China emerged from its three-year anti-COVID strictures. However, by May, the recovery had flopped and sales fell to just 77 percent of 2019’s figures, according to Wind, a data service.

Home sales among China’s leading 100 property developers plunged 28.1 percent in June, year on year, after rising 6.7 percent in April, according to China Real Estate Information Corp.

The recent wave of new listings is likely to continue to force home prices downward, subtracting value from an already troubled economic sector that has been propping up a third of the country’s GDP in recent years.

China’s real estate industry has been in turmoil since fall 2021, when Beijing tightened credit on freewheeling developers. Several prominent builders defaulted on their bonds. Construction stopped on tens of thousands of homes that buyers already had taken mortgages on.

We have detailed China’s real estate mess in articles including:

Beijing, Guangzhou, Shanghai, and Shenzhen are considered the country’s four top real estate markets. All lost population last year for the first time in decades, a particularly worrisome sign for the sector, analysts at Nomura wrote in a note.

In Shanghai in May, sales of existing homes fell 13 percent from April to 15,300 units. From 2019 through May 2022, monthly sales were no fewer than 23,000, Centaline Property noted.

Banks have lowered mortgage interest rates in an attempt to jump-start sales. They also have loosened borrowing rules for developers in hopes of completing more stalled construction projects.

TREND FORECAST: China’s present economy suffers from the memory the country’s people have of its meteoric rise since they joined the World Trade Organization in December of 2001. Many Chinese have no memory of pre-boom China.

As a result, the newly lowered mortgage interest rates that China’s central bank has set will do little to rescue the property industry. Home sales will not rise meaningfully until consumers have regained confidence that the country’s long-term economic future is secure.

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