How to put an end to the bad economic news? By simply ceasing to distribute them. This is the choice made by China, which on Tuesday August 15 suspended the monthly publication of its detailed youth unemployment figures, after a record level in recent months and a new series of feverish indicators for July.
These poor figures increase the pressure for a vast recovery plan in the second world economy, where the state of health of the gigantic real estate sector worries the markets. Activity has been penalized in recent months by the setbacks of several promoters with astronomical over-indebtedness, by waning consumer confidence and the global economic slowdown, which is weighing on demand for Chinese goods and therefore on activity.
To support growth, the Chinese central bank on Tuesday lowered a reference rate for medium-term loans, a measure which makes it possible to reduce the financing costs of commercial banks to encourage them to grant more credit and on more favorable terms. favorable. The interest rate for one-year loans from the central bank to financial institutions (MLF) thus rose to 2.65% against 2.75% previously. It had already been lowered in June. “This decline will have a limited effect,” warns analyst Ting Lu of Nomura Bank, arguing that for the Chinese economy the “worst is yet to come”.
“Adjustment”
Last month, the unemployment rate for the working population as a whole thus increased slightly compared to June to reach 5.3%. China has decided to no longer publish detailed figures for 16-24 year olds, after a record high in June (21.3%).
“The publication of the youth unemployment rate is suspended,” National Bureau of Statistics (NBS) spokesman Fu Linghui soberly told the press, justifying this decision by the need to “adjust” the data on unemployment. ‘job. In China, the unemployment rate is calculated for urban areas only and therefore provides only a partial picture of the situation.
In this context, retail sales, the main indicator of household consumption, only increased by 2.5% over one year last month, according to official figures from the BNS. Analysts polled by the Bloomberg agency expected an acceleration (3.6%), after an increase of 3.1% in June of this index closely followed by the markets. This level remains very far from that of April (+18.4%) when retail sales had achieved their strongest growth of the year, then galvanized by the post-Covid recovery and the return of the Chinese to restaurants, tourist places and shopping malls.
A sign now that the recovery is running out of steam, loans to households fell last month to their lowest level since 2009, according to figures released on Friday. Industrial production also slowed in July (+3.7% year on year), after 4.4% a month earlier. Analysts expected a slowdown but more moderate (4%). For its part, fixed capital investment fell again to +3.4% over one year over the first seven months of the year. This is its weakest growth rate since 2020.
This indicator reflects spending on real estate, infrastructure, equipment and machinery, sectors on which the government has relied in the past to stimulate activity.
Risk of contagion
The bad figures for this Tuesday are published at a time when the markets are scrutinizing the real estate sector, which with the construction sector has long represented a quarter of China’s GDP (Gross Domestic Product).
One of the biggest developers in the long-reputedly solid country, Country Garden, was unable to meet two loan interest payments last week and is at risk of default. These setbacks now raise fears of contagion. On Monday, public developer Sino Ocean announced that it had defaulted on interest repayment.