China’s latest economic data is confirming that the world’s second-largest economy continues to struggle. Hitting its 5% growth target may require more drastic measures, fueling expectations for further government intervention.
July’s data showed:
home prices dropping at the fastest rate in nine yearsindustrial output slowingrising unemploymenteven where data beat forecasts, underlying issues persist, such as inflation driven by bad weather and frontloaded chip imports due to looming US tech restrictions
Analysts are now speculating that Beijing might be forced to ramp up fiscal support, possibly widening the budget deficit to 4% of GDP (from currently 3%) and even issuing shopping vouchers to boost consumer spending. Also, a top policy adviser hinted that China could bring forward next year’s bond issuance if growth doesn’t rebound soon
Skepticism about issuing vouchers remains:
similar measures during the pandemic had limited successwhile some see vouchers as a quick fix, many believe sustained economic recovery hinges on a rebound in the property and stock markets
This article was written by Eamonn Sheridan at www.forexlive.com.
