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Home / Business / China’s retail sales fell unexpectedly due to predominance of consumer caution

China’s retail sales fell unexpectedly due to predominance of consumer caution



China’s retail sales slumped in July, breaking expectations of modest gains, as consumers in the world’s second-largest economy were unable to shake off guard about coronavirus, while rebound in Factory fields struggled to get motivated.

Asian markets fell on Friday following disappointing set of economic indicators, raising concerns about the fragility of China’s emergence from the coronavirus.

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7;s rebound is at a rapid pace after a pandemic crippled its huge economy due to constrained demand, stimulus government and surprisingly resilient exports fueling the recovery. recovery.

However, data from the National Bureau of Statistics on Friday showed weaker annual industrial output growth than expected and retail sales fell for the seventh straight month in July. That is slightly offset by stronger real estate investments, which shows that recent stimulus is supporting construction activity.

Martin Rasmussen, China Economist at Capital Economics, said: “Looking ahead, we expect new infrastructure investment to accelerate in the coming months as the government bond issuance follows. the plan continues to increase ”.

“This will spur a further recovery in the industrial and construction sectors, help absorb the sagging labor market, boost consumption indirectly and sustain economic recovery.”

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Industrial output rose 4.8% in July from a year earlier, consistent with June’s growth but lower than the 5.1% increase forecast.

Retail sales were down 1.1% year-on-year, lacking predictions of a 0.1% increase and following a 1.8% decline in June.

The decline in retail sales was mainly due to the worsening of apparel, cosmetics, home appliances and furniture since June.

One key exception was auto sales, up 12.3 percent, around a 8.2 percent drop in June.

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Investment, on the other hand, has been driven by rapid expansion in the real estate sector, with analysts expecting a rapid increase in infrastructure spending in the coming months thanks to government support.

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The Chinese economy rebounded in the second quarter after a deep decline at the beginning of the year, but the sudden weakening of domestic consumption weighed on the growth momentum.

Investment in fixed assets fell 1.6% in January-July compared with the same period last year, as expected but slower than the 3.1% decline in the first half of the year.

July real estate investments grew the fastest since April last year, underpinned by solid construction and easier lending. New home prices rose at a slightly slower rate in July from a month earlier.

Investment in infrastructure, a strong driver of growth, fell 1.0 percent year-on-year, down from a 2.7 percent drop in the first half of the year.

Iris Pang, chief economist for Greater China at ING, said: “After the flooding ends, I believe that construction work for the affected areas will boost fixed asset investments and public production. Karma”.

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(Additional reporting by Colin Qian; Edited by Sam Holmes)


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