The economy of China, an engine of growth globally, is showing cracks as it delivered mixed signals in the first two months of the current year.
This, as retail sales and industrial output showed resilience, but unemployment and the housing market continue to face challenges.
Responding to the challenges from th economy, the Chinese government has readied an economic package. But there are doubts if that could deliver.
Data from China’s National Bureau of Statistics (NBS) showed that retails sales in China rose by 4 percent year-on-year in January and February, up from December’s 3.7-percent growth. This is in line with estimates.
Meanwhile, industrial production went up at an annualized rate of 5.9 percent in the first two months of 2024, slightly down from December’s 6.2-percent growth. However, this still surpassed market forecasts.
As for urban unemployment, this climbed to 5.4 percent in February, which is the highest level in two years.
The property market, a critical pillar of the economy, still faced challenges as new home prices fell by 4.8 percent year-on-year in February. This, however, is a slight improvement from the 5.0-percent decline recorded in January.
5% GROWTH TARGET
The Chinese is government has set an economic growth target of around 5 percent this year, which will be aided by borrowing more money for various measures. These include giving 300 billion yuan ($41.3 billion) in rebates to consumers who trade-in old cars and appliances for new ones.
However, the borrowing will also support the housing market and local governments saddled with debt.
Hence, there is skepticism if the measures will have an impact.
“It is unclear how much of a jolt this budget will provide to underlying domestic demand and reflation efforts, despite the sizeable rise in the deficit,” Jeremy Zook, the lead China analyst for Fitch Ratings, said in a report, as quoted by the Associated Press.
The tariff threat of the Trump administration is also expected to impact various industries in China, as Beijing has shown no signs of giving up without a fight on the issue.
“If the American side goes further down this wrong path, we will fight to the end,” Commerce Minister Wang Wentao told journalists, as quoted by AP. “A big country should honor its international obligations and fulfill its due responsibilities,” he said to journalists at the Congress. “It should not put selfish interests before principles, still less wield its power to bully the weak,” he added.
