BEIJING: China on Tuesday released weaker than expected economic data, with slowing retail sales growth pointing to shaky consumer confidence in the world’s second-largest economy.
A slew of disappointing figures in recent months has reflected a slump as China’s post-Covid rebound fades.
Retail sales, a key gauge of consumption, grew 2.5% year-on-year in July, the National Bureau of Statistics said on Tuesday, down from 3.1% in June and falling short of analyst expectations.
Chinese leaders have sought to boost domestic consumption in recent weeks, with the State Council last month releasing a 20-point plan to encourage citizens to spend more in sectors including vehicles, tourism and home appliances.
Officials cut the medium-term lending facility (MLF) rate – the interest for one-year loans to financial institutions – from 2.65% to 2.5%.
A lower MLF rate reduces commercial banks’ financing costs, in turn encouraging them to lend more and potentially boosting domestic consumption.
The country’s top leaders, known as the Politburo, have warned that the economy faces “new difficulties and challenges” as well as “hidden dangers in key areas”.
Overall, unemployment rose to 5.3% in July compared to 5.2% in June, the NBS said, without giving a specific figure for youth unemployment, which hit a record high in June.
The NBS said industrial production grew 3.7% in July from a year ago, down from 4.4% in June.
The recent data suggests that China may struggle to achieve a 5% growth target set for the year.
The world’s second-largest economy only grew 0.8% between the first and second quarters of 2023, according to official figures.
Many economists are now calling for a vast recovery plan to boost activity.
But for the time being, the authorities are sticking to targeted measures and declarations of support for the private sector – with little in the way of tangible steps.