Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

China's economic wobbles worsen as factory, property woes mount

Economic Indicators Aug 01, 2022 03:05AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Employees wearing face masks work on a car seat assembly line at Yanfeng Adient factory in Shanghai, China, as the country is hit by an outbreak of a new coronavirus, February 24, 2020. REUTERS/Aly Song/File Photo

By Ryan Woo, Ellen Zhang and Liangping Gao

BEIJING (Reuters) - China's wobbly economy stumbled further at the start of the second half of the year, with factories unexpectedly switching back to the slow lane, a slump in the property sector deepening and job cuts still a widespread menace.

A private poll by Caixin on Monday showed manufacturing activity grew more slowly than expected in July, after surging in June when widespread COVID lockdowns were lifted. That came on top of a bearish official survey on Sunday indicating the sector actually contracted last month.

Also on Monday, a poll by China Index Academy, one of the country's largest independent real estate research firms, showed property sales by floor area in 17 cities tracked by the company slumped 33.4% in July on-month versus a 88.9% post-lockdown jump in June, as buyers shunned a market increasingly filled with desperate sellers.

The country's top leaders last week signalled their preparedness to miss the government growth target of around 5.5% for 2022, a year in which President Xi Jinping is expected to secure a precedent-breaking third leadership term.

Second-quarter gross domestic product grew just 0.4% on-year, but authorities have so far refrained from massive stimulus despite fears of a global recession, uncertainties from the Ukraine war, and the prospect of recurring COVID lockdowns at home.

"Stagnation is what everyone is worried more after the second quarter (GDP) fell into a hole," said Nie Wen, a Shanghai-based economist at Hwabao Trust.

"In the second half, what matters more economically would be to quicken the recovery of consumption."

Retail sales improved in June, up 3.1% on-year, after COVID lockdowns were lifted in some cities including Shanghai. The jobless rate also eased to 5.5% from 5.9% in May.


But consumer sentiment remained fragile, due to widespread uncertainty over jobs.

In the Caixin survey, an index for factory jobs dived to the lowest in 27 months. Companies attributed the staff shedding to cost-cutting, subdued sales, and the non-replacement of voluntary leavers.

"We've shut down at least 10% of the factories in Jiangsu so far, and more than 80% of employees have been laid off," said Xu, general manager of a furniture maker in Jiangsu province, declining to give his full name.

"Although the situation has improved COVID-wise and market-wise, we haven't seen a significant rebound in sales," said Xu, adding that sales are now just half of the usual annual pace of 100 million yuan ($14.8 million).

For those still hanging on to their jobs, consumption may not be a top priority.

A Beijing agent surnamed Lu at Lianjia, a top real-estate brokerage company, said some households are selling their homes in the capital to raise cash.

"A home seller is currently wanting to sell an apartment worth 6 million yuan in northern Changping district because a reduction in income from his job has increased the pressure on his ability to repay 4 million yuan due in mortgage loans," Lu told Reuters.

"There are also some potential home buyers who have chosen to postpone their purchases because of the instability of their jobs."

Continued weakness in the property sector in the medium to long term will impact the entire economy and people's livelihoods, warned Hwabao Trust's Nie.

The sector was similarly under huge pressure in 2015, but policymakers had allowed a rise in household leverage to prop up the market at the time, said Nie.

In 2015, China's economy missed the government's growth target after a stock market rout, an imploding shadow banking sector and the plunging property market.

"But at that time, consumption was still steady, not like this year," he said.

($1 = 6.7550 Chinese yuan renminbi)

China's economic wobbles worsen as factory, property woes mount

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
John Wim
John Wim Jul 31, 2022 10:27PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Love the headline. Factory output grows slower. That takes twisting to another level
Stan Smith
Stan Smith Jul 31, 2022 10:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
M2 Quarterly Growth Turns Negative.. but I'm sure its nothing...LOL. Stocks Up!!
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email