The pace of Chinese economic recovery has accelerated

August data published by the National Bureau of Statistics of the People’s Republic of China at the end of last week indicate that the pace of recovery of the Chinese economy has accelerated somewhat. Thus, industrial production in August increased by 4.5% year-on-year (3.7% in July) – this is the maximum since April 2023 (see chart); analysts expected an increase of 3.9%. In particular, output in processing increased by 5.4% (3.9% a month earlier), in mining – by 2.3% (1.3% a month earlier). Retail sales also turned out to be noticeably better than analysts’ expectations: in August they grew by 4.6% year-on-year (the maximum since May), July growth was 2.5%, the forecast was 3%. Sales of cars increased by 1.1%, tobacco products and alcohol by 4.3%, clothing by 4.5%, and communications equipment by 8.5%. In the first eight months of the year, industrial production grew by 3.9%, retail by 7% (online sales by 12%), investment in fixed assets by 3.2%.

The volume of new loans in the national currency almost quadrupled in August – to 1.36 trillion yuan from 345.9 billion yuan in July (the minimum since 2009), according to a report by the People’s Bank of China. The consensus forecast published by Trading Economics suggested a slightly more modest increase to 1.2 trillion yuan. It should be noted that the growth in lending volumes and the improvement in other indicators in August are explained by the fact that in the summer the Chinese authorities rolled out additional measures to support the economy and business lending, among other things (see Kommersant on September 1).

So far, as August figures confirm, one of the main problems hindering the rapid growth of China’s economy remains the ongoing decline in the real estate market. Prices for new housing in 70 major cities of China in August, as in July, decreased by an average of 0.1% year on year, according to data from the National Bureau of Statistics. Month-on-month prices decreased by 0.3%, the maximum in the last ten months (minus 0.2% in July). Real estate investment also fell for the 18th month in a row: minus 19.1% year-on-year in August after minus 17.8% in the previous month. It should be noted that new support measures have been deployed by the Chinese authorities in this sector, but its recovery is being delayed. The head of the IMF, Kristalina Georgieva, points to this in her latest statements – the organization plans to outline its vision of the future of China’s economy in a country review in the near future.

Kristina Borovikova