A survey by the Caixin news service on Monday showed that the Chinese economy will contract early in the second half of 2022 amid low manufacturing activity, rising unemployment and a sluggish real estate market.
China’s weakening economy, along with disappointing production data from other countries, has reduced oil demand and pushed oil prices higher. downwards four percent.
Poll Caixin found Manufacturing activity in China slowed sharply – perhaps even contracted – in July, prompting a surge in production after the last round of coronavirus lockdowns ended in June.
China Beige Book International (CBBI), an investor advisory firm, aforementioned Industrial production fell in July to a level not seen since mid-2020, while unemployment in the retail sector hit a two-year high. It’s a sign that Chinese citizens and corporate executives “do not believe their Covid Zero nightmare is over”.
“Retail is in big trouble. “There is almost certainly a steady death toll in this industry right now,” said CBBI chief economist Derek Sissors, underscoring fears that coronavirus quarantines could resume at any moment.
Other economic research shows that the Chinese real estate market has fallen 33 percent after an 89 percent increase since the end of the lockdown in June, gross domestic product (GDP) rose only 0.4 percent in the second quarter, and consumers despite a modest 3.1 He showed that he was nervous. percent. % growth in retail spending after quarantine.
Consumer spending could remain stagnant as weak output and well-publicized layoffs worry many Chinese workers about their jobs. Some are taking advantage of the real estate bubble to sell their homes for cash to make up for lost income due to layoffs and layoffs.
While analysts compare the current situation negatively with China’s bailout from the 2015 market crash and banking scandals, consumer spending continued to rise in 2015 while stagnant today. In addition, the real estate industry today has widespread and widely discussed issues that could prevent the rest of the consumer economy from recovering.
Troubled Chinese real estate giant China Evergrande Group failed to deliver on its $300 billion restructuring plan promised over the weekend, analysts said. CNBC The loss of confidence in real estate could create a “negative feedback loop” that will drag the rest of the Chinese economy down.
China’s real estate sector is in the grip of an unusual “mortgage revolt,” in which homeowners refuse to pay because contractors think they won’t finish construction and renovation projects.
“If this issue is not addressed properly, it will have a profound impact on the economy, including government balance sheets, bank balance sheets and household balance sheets,” Standard Chartered economist Shuang Ding told CNBC.
Ding noted that the real estate crisis could take a heavy toll on China’s public finances, as provincial governments derive most of their revenue from taxing land sales. The impending collapse of giant Evergrande is suffocating the market and scaring investors off as individual home buyers voice their dissatisfaction with the mortgage turmoil.
Source: Breitbart
