China saw a significant amount of growth in January. However, the growth experienced may only be artificially inflating growth factors. The nation's non-manufacturing PMI, aided by catering, tourism, and consumer spending, increased nearly 15% over the last month. However, growth in manufacturing was less than 1% at about 0.2%.
Another sign of trouble comes from one of China's strongest economic outputs, the car industry. Sales of cars only climbed 3.6% as opposed to nearly 7% a year ago. Home sales have also caused problems. the top 100 real estate developers recorded a 32.5% plunge in home sales. Finally, China has seen a steep decline in property development, which has helped their economy recently. Excavator sales, a key indicator of new property development, dropped 45% from a year prior.
While the Chinese economy saw some gains last month, they seem to be inflated. Tourism, catering, and consumer spending were very high due to not only the New Year Holiday, but also due to the government loosening some of it's policies on Covid. They saw an uptick in consumer spending as people began to visit stores and restaurants for the first time in months.
The underlying economy, however, does not seem to be strong for the Chinese. The things they do the best, manufacturing and car exportation, are among the top underperformers over the last month. They should see some rebounds as China begins to open up again after strict "Zero Covid" policies end, however, growth could be stymied for some time as their leading sectors recover.
https://www.bloomberg.com/news/articles/2023-02-01/china-s-economic-recovery-still-patchy-despite-brighter-outlook
1 comment:
After the ill-advised and socially destructive 'zero-covid' policy of the CCP, the easing of policies seems to be a welcome relief. The downtick in car sales can be easily explained by the fact that according to statista, roughly 44.4% of all car sales in China are from domestic manufacturers, and the car industry in China mostly caters to the domestic economy. Therefore, it is not too much of a stretch to write off the poor performance of the automotive sector to the zero-covid policy.
However, I firmly believe that the real estate sector of the Chinese economy is a massive bubble, owing to the fact that real estate is pretty much the only way that most ordinary citizens can invest their money, and the easing of development is probably a good thing for the Chinese economy in the long run.
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