Residents go through disinfectant spray while their shared apartment unblocks for epidemic control on Aug 14, 2021 in Nanjing, Jiangsu Province, China.
Ruan Zhong | Visual China Group | Getty Images
BEIJING – China released economic data for July showing slower-than-expected growth as the world's second largest economy struggled with floods and a Covid-19 resurgence.
The slowdown was particularly noticeable in individual Chinese consumer spending, despite efforts by the authorities to build consumption as the engine of economic growth.
The data showed that consumers were reducing their spending across the board, be it on expensive products such as cars or lower-cost products such as cosmetics that can be purchased through online e-commerce platforms.
Retail sales rose 8.5% year over year in July, less than forecast 11.5%, according to analysts polled by Reuters. Auto-related sales, the largest component of retail sales by value, were the only category to decline 1.8% year over year in July.
The cosmetics sector was one of the slowest growing categories, with sales increasing just 2.8% year over year in July, up from a 13.5% growth in June.
Online sales of physical consumer goods rose 4.4% in July, well below the five-year average of about 21%, according to CNBC official data.
Bruce Pang, head of macro and strategy research at China Renaissance, attributed the sharp drop in online sales to massive June shopping promotions followed by logistics disruptions in July amid Covid-19 travel restrictions, floods, and typhoons.
E-commerce giants Alibaba and JD.com achieved record sales of $ 136.51 billion during the June 18 shopping event known as "618". China's other major shopping festival of the year falls on November 11th.
Outside of consumption, too, China's manufacturing sector grew more slowly than expected.
According to a Reuters survey, industrial production grew by 6.4% and was therefore below expectations of a year-on-year increase of 7.8% in July.
According to Reuters, investments in property, plant and equipment rose by 10.3% in the first seven months of the year and thus below the forecast growth of 11.3% compared to the previous year for the period from January to July.
The National Bureau of Statistics noted "the impact of several factors including growing external uncertainties and the domestic COVID-19 epidemic and flood situation," according to a press release. The office added that "economic recovery is still unstable and uneven".
On consumption, Bureau spokesman Fu Linghui said at a press conference that China's willingness to spend is increasing as per capita spending rose faster than disposable income in the first half of the year – an increase of 17.4% or 12 %.
The country created 1.24 million new urban jobs in July to meet Beijing's goal of creating more than 11 million new urban jobs this year.
However, the urban unemployment rate rose to 5.1% in July, up from 5% in the previous month. The unemployment rate among 16- to 24-year-olds remained much higher, rising from 15.4% in June to 16.2%.