There was some good news from China’s National Bureau of Statistics (NBS) on Monday, with retail sales performing better than expected on the back of a five-day holiday in May. But industrial output growth slowed compared to April and news from the property market remained dismal.
Home prices fell for the 11th consecutive month despite a raft of policy measures that made it easier for prospective buyers to borrow and eased restrictions on buying second homes. The central bank’s RMB300 billion (€38 billion) re-lending scheme to help state-owned enterprises buy up unsold homes has yet to have a discernible impact.
Even the most optimistic players within the property sector doubt that prices will stabilise before the end of 2025 as millions of homes remain unsold. Pessimists fear that the government’s moves are not big enough to revive the market but will worsen the burden of debt on China’s provincial and local authorities.
The latest economic data point to a challenge for China to reach its growth target of 5 per cent and adds to pressure on the Communist Party ahead of its Third Plenum in July. This meeting will set China’s economic strategy for the next few years and it is expected to introduce a fresh package of reforms.
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Most western economists believe that China needs economic stimulus and better social welfare and public healthcare to boost consumer spending. But Xi Jinping has pursued a strategy of supporting high-end manufacturing in sectors like green energy technology as drivers of the economy.
With domestic demand weak, Chinese manufacturers are increasingly dependent on exports to remain profitable. But the United States and the European Union have recently imposed steep tariffs on Chinese electric vehicles (EV) signalling their determination to protect their own industrial base.
Beijing announced on Monday that it was launching an anti-dumping investigation into EU pork products, looking into subsidies and overcapacity. The government said the probe was in response to an application from the China Animal Agriculture Association, which represents the pork industry.
But it has escaped nobody that Spain, the biggest exporter of pork to China, is also one of the strongest advocates for increasing tariffs on Chinese EVs.
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