The economic recovery from the corona crisis in China seems to be slowing down. The Chinese government released disappointing figures on industrial production, retail sales and business investment in the world’s second-largest economy.
Retail sales rose 12.4 percent in May compared to last year, which is significantly less than April and the slowest increase since the beginning of the year. Previously, the reopening of the economy after the corona pandemic, which caused consumers to spend a lot of saved money, has already significantly benefited, but that effect is now fading.
Production in China’s sizeable manufacturing industry rose 8.8 percent year-on-year last month, also weaker than a month earlier and also lower than expected. It is the third month in a row that industrial production has weakened. This may be partly due to disruptions caused by corona outbreaks in the essential industrial province of Guangdong in southern China. As a result, activities in important seaports were also disrupted.
In addition, business investment in fixed assets such as buildings and machinery was less strong in the first five months of this year than economists had anticipated. The Chinese government says the economy is still in stable recovery but points to uncertainties, including new coronavirus outbreaks. In addition, there are problems in the supply due to shortages of computer chips in particular.
In the first quarter of this year, the Chinese economy posted record growth of more than 18 percent compared to a year ago, when the Asian country was hit hard by the pandemic and lockdowns. Economists expect growth to reach 8 percent in the second quarter and then gradually slow down in the quarters thereafter. For the whole of 2021, a plus of 8.5 percent is expected. That would be well above the Chinese government’s target for growth of more than 6 percent.