China’s economy snapped in July with sharp contractions across the board. The country’s growth quickly ran off the rails as a stagnating domestic demand set alarm bells ringing about the country’s underlying economic health. To this end, Beijing accelerated efforts to eliminate excess capacity, the effects of which likely exacerbated the slowdown.
According to the most recent numbers, fixed-asset investment in China increased only 1.6% year-on-year during the first eight months of this year. This expansion was below the consensus forecast of economists, who predicted a 2.7% increase. Growth rates were down—the national GDP’s growth rates recently fell from 2.8% in the first half of the year. This move represents a major turnaround in the previous direction. Analysts were expecting a rosier picture altogether, but the numbers show the tightening squeeze of the rest of the economy.
In July, the official survey-based urban unemployment rate reached 5.2%. This is up from the previously flat 5% that was seen in May and June. The unemployment rate for young people age 16 to 24, excluding college students, has remained over 14% for the last twelve months. This trend is more alarming. This troubling trend goes to show the struggles that younger generations have experienced as they enter the workforce during a time of economic uncertainty.
This comes as retail sales in China grew by a tepid 3.7% year-on-year in July. This growth was sharply less than analysts’ estimates of 4.6% and represented a slowdown from June’s more robust 4.8% growth. It was a real boom year – industrial output was up an impressive 5.7% compared to last year. Yet these numbers are a reminder that the recovery is way behind schedule.