There is growing evidence that China’s economic growth rate is slowing, according to the latest data, and there is debate over whether the government is doing enough to rectify the situation. The Chinese manufacturing sector contracted for the third month in a row in June, and the services sector also weakened. While new orders fell in both sectors, unemployment was particularly youth increased between
According to economist Louise Loo’s statements, the data will create a trend towards the need for further relief to the economy. He also stated that China’s trade fundamentals are deteriorating. The country faces a series of problems that will jeopardize its long-term growth potential if it does not carry out serious reforms.. Increasingly, these problems debt burden, high youth unemployment and troubled real estate has a market.
Also, as political tensions escalate, many manufacturers have begun to diversify their supply chains, undermining China’s role as the world’s factory.
China’s economic recovery after Beijing lifted drastic Covid-19 restrictions, data released on Friday showed. on solid foundations has been proven once again. Global demand for goods fell, while the local recovery slowed as consumer spending lost momentum.
China’s official Manufacturing Purchasing Managers’ Index (PMI) rose slightly to 49 in June. However, this figure is not enough to exceed the 50-point threshold between expansion and contraction, indicating that the contraction in China’s manufacturing continues. The employment sub-index fell to 48.2 in June, showing the fourth consecutive month of contraction. The unemployment rate among workers aged 16-24 rose to 20.8 percent in May, revealing that the problem of youth unemployment has worsened.
Despite the decline in foreign demand, China needs exporters to maintain its leadership in global trade. tax breaks And currency depreciation Despite the implementation of such policies, the demand from abroad is still decreasing. In June, the new export orders component of the manufacturing PMI remained at 46.4, continuing at a five-month low. The new orders index, on the other hand, continued to contract at 48.6 in general.
Activities in the services sector showed that activity in the sector, which was an important driver of the post-pandemic recovery, weakened further in June. According to statistics, the sector’s activity index fell to 52.8, which is lower than 53.8 in May.
The employment sub-index, which tracks the services sector, also recorded a contraction for the fourth month in a row, reaching 46.8 in June. The new orders index, on the other hand, showed contraction for two consecutive months and remained at 49.5. The construction activity index, another sub-index that tracks construction activities, declined from 58.2 in May to 55.7 in June, revealing the weakness in the construction sector.
This weakness raises questions about the ineffectiveness of steps to ease interest rates in addressing the stress that is limiting demand. Economists, households and companies weak demand for credit He thinks that Beijing is hesitant to provide large loans because of this. So far, China has refrained from massively increasing public spending.
“Weakening financial support has put construction activity under pressure and even services sector growth, which was a bright spot earlier this year, has dropped below pre-pandemic levels,” economists at Capital Economics said.
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