Stay informed with free updates
Simply enroll to the Chinese economy myFT Digest — delivered on to your inbox.
China’s retail spending jumped last month however the property sector remained under pressure despite a barrage of stimulus efforts as policymakers battled to revive confidence on this planet’s second-largest economy.
Retail sales rose 4.8 per cent yr on yr in October, based on official data released on Friday by China’s National Bureau of Statistics, the best rise in eight months. Industrial production added 5.3 per cent, trailing forecasts of 5.6 per cent, based on a Reuters poll of analysts.
Latest home prices across 70 major cities dropped 0.5 per cent compared with September, based on Financial Times calculations based on NBS data, the sixteenth straight month of declines.
Yr on yr, recent home prices dropped 5.9 per cent, essentially the most since 2015, while declining investment in real estate deepened to 10.3 per cent within the 10 months to the top of October, from 10.1 per cent last month.
Beijing has announced a series of support measures since September to spice up the economy, comparable to cutting lending rates and inspiring stock buybacks. Last week, authorities unveiled a debt refinancing package for local governments, which have been hit hard by the three-year property sector slowdown.
The persistent real estate weakness will add to pressure on policymakers as they prepare for a second Donald Trump presidency within the US, which threatens to disrupt trade between the world’s two biggest economies. Exports, which leapt by essentially the most in two years in October, have been one among the few vivid spots for the Chinese economy at a time when momentum has waned.
“The true estate sector was particularly disappointing” said Carlos Casanova, senior economist for Asia at UBP, who pointed to “limited spillovers” from the federal government’s support efforts. “It’s going to take more policy support to get us there,” he added.
Beijing has set a goal for GDP growth of about 5 per cent for 2024, one among its lowest in a long time. The housing slowdown has added to deflationary pressures and weighed heavily on consumer confidence.
Zichun Huang, China economist at Capital Economics, noted that much of the development last month got here from consumption, with a gauge of value-added within the services sector, rising 6.3 per cent, essentially the most this yr. “Property support measures do appear to be providing some relief to the housing market,” she added, pointing to higher volumes of recent home sales.
She predicted accelerated fiscal spending to support activity, but added that Trump’s electoral victory last week “casts a shadow over the outlook further ahead”.
Casanova said that “pockets of strength” in consumption, which he linked to government policies that encouraged consumers to trade in old goods comparable to household appliances for newer ones, were “not necessarily stable drivers of demand”. Spending was also buoyed by a weeklong holiday in October.
“We don’t imagine it’s possible to spice up consumption . . . within the absence of some stabilisation of real estate indicators,” he said.
