- Despite some moves by the People’s Bank of China to lower borrowing costs, corporate borrowing has returned to “very low levels” due to loan rejections and higher average loan interest rates.
- Home builders said prices have fallen sharply this month as sales slow. Real estate agents reported falling prices and sales were flat despite a sharp drop in mortgage rates.
- Inflation likely slowed in September, but China Beige Book said “reports that China is facing deflation remain exaggerated.”
The People’s Bank of China is under pressure to cut bank interest rates and reserve requirements as growth slows in the world’s second-largest economy.
Sheldon Cooper | SOPA Images | Light Rocket (via Getty Images)
China’s modest economic recovery appears to have stalled in September, with growth in retail sales and pricing power, manufacturing production and lending weaker than on paper last month, according to the monthly China Beige Book survey released on Friday.
The setback will raise concerns that third-quarter growth will be anemic, raising the risk that the world’s second-largest economy will fall short of the central government’s 5% growth target. Economists still expect September data to remain relatively weak, with most data pointing to a further stabilization of the economic slowdown.
Several economic indicators in August highlighted signs that China’s economic slowdown is stabilizing. Indeed, last month’s official retail sales and industrial production statistics were better than expected, confirming positive signs from other data points, from inflation to the Purchasing Managers’ Index (generally seen as a leading indicator). .
“Retail spending has slowed. [in September]. China Beige Book research administrators said in a statement on Friday that food, along with luxury goods, had the biggest decline, adding: “‘Revenge spending’ on services has had mixed results. As the Lunar Festival approaches, travel has “Although sales were strong, sales in the service industry and chain stores suddenly slowed down.” restaurant. ”
China Beige Book administrators said the September survey results were based on a survey of 1,330 companies, which were evenly divided between private and state-owned enterprises, although there were slightly more large enterprises than small and medium-sized enterprises. This is a feature.
China begins its annual week-long holiday on Friday to commemorate National Day on October 1, which this year coincides with the Mid-Autumn Festival, also known as the Moon Festival or Harvest Moon. Overseas travel increased sharply during the first “Golden Week” after the resumption of overseas travel. According to Trip.com, bookings for some international destinations have increased 20 times compared to the same holiday period last year.
Among the private study’s more important findings, despite several moves by the People’s Bank of China to lower borrowing costs, corporate borrowing has become “very It has returned to a low level.
Debt problems plaguing China’s real estate developers stemming from widespread crackdowns are not likely to have widespread repercussions, according to research by China Beige Book published ahead of China’s monthly batch of official statistics. Mainland financial institutions are becoming more cautious about risk exposure due to concerns that
The Chinese government is scheduled to release its official Purchasing Managers Index on Saturday. Money supply statistics are scheduled to be released on October 11th, while monthly inflation and trade statistics are tentatively scheduled for release on October 13th. A large number of activity data and China’s third quarter growth record will be released on October 18th.
China’s beleaguered real estate sector showed signs of further deterioration in September.
China Beige Book said: “Home builders said sales had slowed this month and prices had completely contracted. Real estate agents reported falling prices, despite a significant drop in mortgage rates. “Sales have leveled off,” he said.
“Commercial real estate problems have worsened, with price appreciation sharply declining and the pace of transactions correspondingly slowing considerably,” the research administrator added. They said their own index of fiscal activity had turned positive, but the results so far were “more like life support than a breath of fresh air”.
Export order growth among survey respondents fell to its lowest level since March, underscoring the external pressure on China from slowing global demand, compounded by the country’s struggle with weak domestic demand.
This comes after the domestic Chinese yuan has depreciated by about 5.5% against the dollar since the beginning of the year.in Wednesday’s statement After the quarterly Monetary Policy Committee meeting, the People’s Bank of China pledged to “resolutely prevent currency overshoot risks and keep the renminbi fundamentally stable in a reasonable balance,” according to a CNBC translation. repeated.
However, although domestic orders maintained their pace, production growth slowed slightly compared to August. China Beige Book’s September earnings index fell, suggesting that profit growth has slowed more noticeably than in August.
Still, private surveys show that inflation likely slowed in September, as input cost, selling price, and wage rate indexes all fell from the previous month, while input cost inflation remained flat. It turned out that the price index was higher than a year ago.
“Reports that China is facing deflation remain exaggerated,” China Beige Book research managers said.