China's industrial profits, retail sales continue to increase in July, but recovery foundation 'not solid' yet: NBS
Published: Aug 15, 2022 12:35 PM
File photo shows a view of Shenzhen, south China's Guangdong Province. Photo: Xinhua

File photo shows a view of Shenzhen, south China's Guangdong Province. Photo: Xinhua

China released its main economic indicators for July on Monday, maintaining growth momentum from June as the world's second-largest economy is on track for a strong economic recovery amid government stimulus, but a lower-than-expected expansion pace signals headwinds linked to global uncertainty and sporadic COVID-19 flare-ups.

Retail sales grew by 2.7 percent in July from a year ago, down from growth of 3.1 percent in June, the National Bureau of Statistics (NBS) said on Monday. That's also below the 5-percent growth forecast by a Reuters poll.

Industrial profits rose by 3.8 percent in July, a decline from the 3.9-percent increase in June and missed market expectations of 4.6-percent growth. Profits at Chinese industrial firms returned to growth in June after two months in the red.

Fixed asset investment for the first seven months of the year increased by 5.7 percent from a year ago, a drop from the 6.1 percent in the January to June period.

The unemployment rate came in at 5.4 percent in July, a decline of 0.1 percent from June. 

"The national economy maintained strong recovery momentum," the NBS said in a statement on Monday. But it warned of rising stagflation risks globally and said "the foundation for the recovery of the domestic economy has yet to be consolidated."

Looking forward, we will seize the critical period of economic recovery, focus on expanding domestic demand, stabilizing employment and consumer prices, and effectively guarantee and improve livelihoods, the NBS said.

The Chinese government unveiled a series of stimulus to prompt up growth. In a fresh move,

China's central bank on Monday unexpectedly lowered interest rates on key lending facilities for the second time this year. 

The People's Bank of China (PBOC) said it was lowering the rate on 400 billion yuan ($59.33 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.75 percent, from 2.85 percent.

NBS spokesperson Fu Linghui said at a press conference on Monday that the domestic economy is still in the process of recovery, with "many difficulties" impacting business operations and "relatively large constraints" on market demand. The foundation for economic recovery has yet to be consolidated.

Despite these difficulties and challenges, the fundamentals for long-term growth have not changed, Fu said, noting that China's economy, with strong resilience, and great potential will gradually recover and is expected to run in a reasonable range backed by a series of anti-epidemic and pro-growth economic policies and measures.

Real estate is the main factor behind the decline in investment and consumption, while contributing negatively to economic growth this year,Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times on Monday, noting that the industrial recovery had already "entered a normal track."

If foreign trade maintains a good growth rate in the second half of the year, with an alleviation of the real estate situation, investment and consumption will perform better, Tian observed.

Tian forecast that third quarter GDP will recover strongly, probably at around 5 percent. Annual GDP growth is expected to be around 4.0-4.5 percent.

Global Times