China’s economy has slumped further in the second quarter of the year, with manufacturing slowing unexpectedly and a downturn in the real estate sector intensifying, according to official and independent data. This has raised fears of a wave of layoffs in the second half of the year adding to already severe unemployment issues in China.
China's economy deteriorated further in July, according to a China Beige Book International (CBBI) report in early August, which provides independent economic data. Factory outputs and new production orders in China reached their slowest since mid-2020, and retail employment was at its worst in more than two years, according to the latest CBBI survey. Deterioration in revenue growth for manufacturers and retailers curtailed profits, the report states.
On Aug. 1, official data revealed even worse numbers in manufacturing and real estate. Data released by the Chinese regime's statistics bureau show that the purchasing managers' index (PMI) of China's manufacturing industry for July was 49.0 compared with 50.2 in the previous month, a decrease of 1.2 percent, which is lower than the critical level of 50.
In July, with more cases of COVID-19 emerging in parts of China, the communist regime continued its strict “zero-COVID” measures, putting many cities in lockdown, including industrial centers and economic hubs.
Manufacturing activity, which had rebounded in June after the lockdowns were lifted in parts of mainland China, has now slumped again.
The China Real Estate Index Research Institute publicized that in July, the average price of new residential buildings month-over-month in 100 cities in mainland China dropped instead of increasing, and the average price of homes further plummeted. Price drops for new houses were greater in cities, especially in the Yangtze River and Pearl River deltas, where housing prices had been increasing in previous years.
High Unemployment RateAccording to a report by major Chinese finance website Caixin, employment in the domestic manufacturing sector has continued to shrink, with the employment index falling to its lowest point in 27 months. The report attributed the layoffs to cost-cutting measures of factories, weak sales, and a "cautious attitude toward hiring" across industries.
Because of widespread uncertainty about employment, consumer confidence remains fragile. Among those who still have jobs, many are more reluctant to spend money.
Dim ProspectsAt the Chinese Communist Party's (CCP) Politburo meeting on July 28, the regime stated that this year's international environment is "complex and severe" and that domestic tasks are "difficult and arduous." CCP leadership remained silent on the 5.5 percent economic growth target it set for this year. Analysts say this suggests that the CCP believes it will ultimately fail to achieve this goal.
Independent current affairs commentator Tang Jingyuan told The Epoch Times that the downturn in Chinese real estate, a pillar industry and the largest sector of local government investment and revenue, has intensified.
“Manufacturing employment continues to shrink, and unemployment hits a new high, and manufacturing corresponds to the export of China's economy. It shows that mainland China's consumption stimulus policy has no effect,” Tang said.
“These data reflect that the three pillars of China’s economy—investment, exports, and consumption—are overall in deceleration or even stalling. On this basis, the CCP authorities still stick to 'zero-COVID' policy, which will only hurt the Chinese economy.
“To make matters worse, China's economic crisis is not a question of whether it can achieve the targeted growth rate, but whether it can stabilize the economy in the next five or even 10 years.”