2 months ago • 2 mins
What’s going on here?
China’s latest economic update was full of mixed signals, so fed-up investors have started checking out a fresh suitor.
What does this mean?
China’s industrial sector clawed a bit of a comeback last month, churning out a better-than-expected 6.6% more products than the same time a year ago. But retail sales – which shed light on the population’s spending habits and financial confidence – were slower than hoped versus last year’s figures. What’s more, last year’s Covid-impacted sales mean even this tiny uptick may be less promising than it looks. Those limp sales mean there’s little cash swirling around the economy, which won’t be helped by investment in the property market dropping over 9% since January this year. After all, the state of the market influences house prices which, in turn, shapes how secure folk feel financially.
Why should I care?
For markets: China can’t win for losing.
The Chinese central bank isn’t waiting for the country to fix itself, mind you. By announcing a record injection of cash on Friday, the bank’s hoping to bolster the economy against the pressure of a falling housing market. The wad of cash is twice as much as analysts expected, and a lot heartier than last month’s helping hand. But the central bank needs to strike a delicate balance: the country’s already falling into deflation, and if freshly funded firms manage to pump out more stock, prices will only continue their descent.
The bigger picture: The world’s next superpower.
Investors are fickle folk: they’ve already looked past China to lock eyes with India, touting its thundering economy as the star of emerging markets. In fairness, the National Stock Exchange of India did recently become the world's seventh-biggest stock market after almost doubling since 2020. And just like China’s early days, India is investing heavily in its own infrastructure and internal projects, all funding the ambitious goal of being a developed economy by 2047.
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