What’s going on here?
Data out on Friday suggested that China’s economy is gradually getting back on its feet.
What does this mean?
China hasn’t been the bearer of great economic news lately – but in August, government stimulus and a summer travel boom helped bring some unexpected sunshine. Retail sales, which tell us a lot about how consumers are feeling, rose by 4.6% compared to last year. That’s not just better than July: it’s also better than what most were expecting. And factories have been busy too – mostly because carmakers have been in overdrive – with industrial production up by 4.5%. Throw in a drop in unemployment and the fact that consumer prices aren’t falling anymore, and you’ve got signs of an economy on the mend.
Why should I care?
Zooming in: Trying to prop up property.
Not all the data was rosy, mind you. China’s sprawling property market, a big chunk of its economy, is still showing cracks. Despite the government’s best efforts, like slashing downpayments and offering better mortgage rates, new home prices in 70 major cities dipped in August. Still, many experts reckon the government has more tricks up its sleeve to support the market, and think it’ll take time for the full effects to trickle through.
The bigger picture: Bitter first, sweet later.
There’s been a fair share of sourness about China’s performance this year, but history suggests the country might have a pretty sweet future. The nation is flexing its muscles in areas like renewable energy supply chains, positioning itself for a sustainable future. And there’s more: China’s now seemingly crafting its own advanced chips, suggesting US efforts to curb its tech progress might be hitting a wall. Remember, China’s faced economic storms before, like the 1998 Asian financial crisis and the 2015 yuan devaluation. And each time, China left the naysayers who predicted its downfall with a whole lot of egg on their faces.