AlwaysFree: China’s Economy Slows In November Amid Deepening Property Slump

China’s economic activity slowed further in November, dragged by a deepening slump in the property market and sluggish consumption amid strict restrictions to curb COVID-19 outbreaks. The slowdown came despite steady growth in trade. China’s commodity exports and imports totalled CNY3.72 trillion ($584 billion) in November. That represents an expansion of 20.5% from a year earlier, faster than the 17.8% annual growth in October.

In addition, China’s factory production grew 3.8% year-on-year in November, data from the National Bureau of Statistics showed. That was faster than the 3.5% growth in October and economists’ projection of a 3.7% gain. The increase came after the government rolled out measures to ease a power crunch. However, surging COVID-19 cases in Zhejiang province forces some factories to shut down temporarily, threatening to disrupt production at one of China’s main manufacturing bases.

Surging infections have also discouraged consumer spending, with retail sales growing just 3.9% year-on-year in November, slower than 4.9% in October and economists’ expectations of a 4.5% gain. The slowdown came despite an uptick around the “Singles Day” shopping festival last month. China’s draconian restrictions also affected sectors including restaurant and catering, where sales dropped 2.7% in November, compared to a 2% fall in October. Consumer spending has been a laggard in China’s post-pandemic recovery.

A downturn in the property sector continued to slow down overall investments. The growth in China’s fixed-asset investment decelerated to 5.2% year-on-year in January-November, from the 6.1% pace in January-October, official data showed, in line with analysts’ estimates. New home prices fell 0.33% from October to November in 70 cities, the steepest monthly decline in about six years. New construction starts dropped 9.1% year-on-year in January-November, widening from a 7.7% decrease in January-October. The property sector is one of the largest commodity consumers in China, which provides jobs for migrant workers coming from interior regions.

Despite the recent slowdown, Beijing is optimistic about achieving its modest GDP growth target of more than 6% this year. However, the People’s Bank of China is expected to shift toward easier monetary policy in the coming months to prop up slowing growth. These measures may include reducing banks’ reserve-requirement ratio further and even cutting key benchmark interest rates. The IMF and the World Bank predict China’s GDP growth to slow to 5.6% and 5.4%, respectively, in 2022.

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