China’s economy shows signs of improvement

Economic activity in China appeared to improve in August, with data released on Friday suggesting a downturn in growth may be stabilising

Hong Kong: Economic activity in China appeared to improve in August, with data released on Friday suggesting a downturn in growth may be stabilising, a media report said.

But more bad news on real estate highlighted the challenges that still lie ahead, says the CNN report. Industrial production — which measures output from sectors such as manufacturing and mining — rose 4.5 per cent in August from a year earlier, gaining from the 3.7 per cent increase seen in July, according to the National Bureau of Statistics (NBS).

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Retail sales, which measures consumption, expanded by 4.6 per cent from a year earlier, compared to the tepid 2.5 per cent increase reported in July, CNN reported. There was more evidence that the two-year crisis in real estate is far from over.

Sino-Ocean, a major state-backed property developer, said it would suspend repayments on its offshore borrowings, in a sign of how the ongoing property crisis could continue to weigh on economic expansion. Investment in fixed assets, including infrastructure and construction, gre by 3.2 per cent in the first eight months of this year from the same period a year ago, slightly weaker than the 3.4 per cent seen in the first seven months of 2023, CNN reported.

Moody’s downgraded its outlook for the overall real estate sector on Thursday, citing a downturn in residential sales and continued jitters about the health of the industry. Larry Hu, chief economist for Greater China at Macquarie Group, said despite ‘widespread pessimism’, the worst may be over for the world’s second largest economy, which is currently grappling with weak export demand from global markets and its worst ever real estate slump.

“Going forward, the headline growth numbers could improve on policy support and base effects, but the pace will be modest,” he wrote in a Friday research note, citing weakness in the property sector as well as low confidence among business owners and consumers, CNN reported.