China data cast shadows on economyーNHK WORLD-JAPAN NEWS
Let’s take a look at the topics we’ll track in the week ahead. On Saturday, China’s National Bureau of Statistics will release its purchasing managers index for May. It’s an indicator of sentiment in manufacturing and services. Now, manufacturing activity dipped below the expansion contraction line in April for the first time in three months. Hefty tariffs between China and the US hampered exports. Economist Kolong believes that despite a dramatic reduction in those levies, the figure for May will also come in under 50. This is because although uh tariffs have been uh significantly reduced uh 30% uh tariffs uh still remains for um manufacturing of uh medium and low uh value add a products in particular. uh even uh 30% tariff will make it uh difficult to continue doing business. Key economic indices for April show slower growth in both factory output and retail sales. The problem facing the Chinese economy is an imbalance between supply and demand namely uh insufficient demand and excess supply. To rebalance it, it is necessary to improve uh employment as 12.2 million university students are going to graduate. So employment pressure remains very very high. Therefore, the most important factor to determining whether the Chinese uh economy will recover is the employment situation. The latest data also shows the property slump isn’t over. Investment in real estate development in the first four months of the year dropped from last year by more than 10%. Twothirds of major cities in April saw prices for new houses decline. Investment uh is declining because the real estate market remains in the state of uh over supply. As the real estate uh slum draps on, it is highly likely that the local government debt will increase and uh banks will see uh sharply uh rise in the non-performing loan. To uh cover the local government debt and the bad loans, the government is issuing long-term uh government bonds. However, I believe that uh unless demand is stimulated, the real estate uh slump will not go to an end. K’s long-term forecast is that the Chinese economy will gradually slow down. He thinks the jobless rate for young people will remain high, so the Xi Jinping administration won’t be able to stimulate domestic demand, especially private consumption. I’m Yanakamarie and that wraps it up for this week’s Viz Picks.
With China set to release key economic data, one analyst says it will likely show a continued dip in business sentiment and real estate investments, due to the lingering effects of tariffs and the employment situation. #business #china
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