China's Economy Struggles to Shift into High Gear
China's economy continues to face headwinds from a slowing real estate sector, with property investment down 10.8% year-over-year.
China EconomyReal Estate SectorFixedasset InvestmentRetail SalesGdp Growth RateReal EstateAug 15, 2024
Data released Thursday shows China's fixed-asset investment expanded by 3.6% year-over-year in the first half of 2024, falling short of expectations. The weak data was mainly fueled by slowing infrastructure investment, according to analysts from Goldman Sachs, who pointed to a drag from heavy rainfall and flooding.
Meanwhile, real estate investment remains the economy's key sore spot, with a 10.8% year-over-year fall. The data shows new-home prices across 70 of the country's biggest cities fell 5.3% year-over-year in July, following a 4.9% decline in June. China's housing market has been battered by slowing property sales and starts in the last few years, and its struggles seem far from over as a sizable portion of its available housing stock remains empty.
One bright spot was retail sales, which increased 2.7% year-over-year in July, above analysts' estimates and up from a 2% increase in June. The jump was fueled by online sales, partly due to the 618 Online Shopping Festival online retail event, which came earlier and lasted longer than usual, the Goldman analysts said.
Slowing demand within China raised warning signs last month, especially as potential tariffs threaten the country's strong exports. The government has rolled out a range of new policies meant to stimulate consumer spending as well as raise household income in the last few months.
Frequently Asked Questions
What is the current state of China's economy?
China's economy is still stuck in low gear, with fixed-asset investment posting an unexpected decline in the first half of the year.
What is the main reason for the decline in China's fixed-asset investment?
The weak data was mainly fueled by slowing infrastructure investment, according to analysts from Goldman Sachs, who pointed to a drag from heavy rainfall and flooding.
How is China's real estate sector performing?
Real estate investment remains the economy's key sore spot, with a 10.8% year-over-year fall. The data shows new-home prices across 70 of the country's biggest cities fell 5.3% year-over-year in July, following a 4.9% decline in June.
What is the outlook for China's GDP growth rate?
Goldman analysts believe that the country's goal of an approximately 5% GDP growth rate for 2024 may be at risk, and expect more demand-side easing measures in coming months.
What is the 618 Online Shopping Festival?
The 618 Online Shopping Festival is an online retail event that came earlier and lasted longer than usual, which contributed to the jump in online sales and retail sales in July.
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