What’s going on?
Data out on Tuesday showed China’s chipper recovery is starting to lose its oomph.
What does this mean?
You’re not the only one whose New Year resolutions haven’t survived the spring: after a burst of activity at the beginning of 2023, China’s economic rebound is losing steam. Sure, retail sales in April jumped 18.4% from the same time last year, the biggest increase in over two years. But that surge was partly due to last year’s lockdown in Shanghai – and the numbers still fell short of economists’ hopes. Industrial output didn’t hit the target either, which isn’t surprising considering the weak global economy. And while the overall jobless rate did ease up from March, youth unemployment set a record high – suggesting that cautious businesses aren’t going on any hiring sprees.
Why should I care?
Zooming in: Recovery isn’t a piece of cake.
Experts across the board were expecting a smoother rebound from China – and while there’s not much the country can do about the weak global economy, it can do more to get its own house in order. See, right now, consumers and businesses are feeling less than confident, with flagging investments, shrinking imports, and feeble demand for loans. But economists think more stimulus could tap into the economy’s potential: after all, there’s still plenty of promise, with households, for example, sitting on trillions in savings right now. So watch this space: just this week the central bank hinted that it’s poised to keep supporting the economy…
The bigger picture: Ironing out problems.
Any moves by China’s government won’t just make a splash at home: they’ll ripple across the globe. After all, China’s a heavyweight in the world economy, and its fortunes have a big influence on markets like metals. Case in point: nickel and iron ore prices took a hit when the news broke, while copper’s languishing around a months-long low.
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Originally Posted May 16, 2023 – Chin Up, China
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