China's Economy Struggles in July Amid Tariffs and Weak Property Market

• Production output and retail sales declined in July
• Investment in real estate fell by 12% in the first six months
• Unemployment rate increased to 5.2%, while consumer prices rose

This was reported by ABC News, Asharq Al-Awsat.

China's economy showed signs of weakening in July, as production output at factories and retail sales declined, while housing prices once again fell, according to data released on Friday.

Uncertainty regarding export tariffs to the United States remains tight on the second largest economy in the world after former President Donald Trump continued a pause in increasing import tariffs for 90 days, starting from Monday, after a 90-day period that began in June.

Meanwhile, as Chinese officials work on a broader trade agreement, China previously reported that its exports in July rose by 7.2% year-on-year, while imports rose at the fastest pace for the year, as businesses sought to stabilize amid Trump's trade war with Beijing.

However, this also reflected a lower baseline for comparisons, and manufacturers reported investments, especially in manufacturing, observing a decline in subsequent development events. Chinese manufacturers also increased supplies to Southeast Asia, Africa, and other regions to compensate for losses in the U.S. market.

Nonetheless, the annual growth rate of industrial production fell to 5.7% in July from 6.8% in June, the National Bureau of Statistics reported.

Investment in manufacturing equipment and other fixed assets grew only by 1.6% in January-July, compared to a growth of 2.8% in the first half of the year.

Investment in real estate fell by 12% in the first six months of the year, while investment in residential construction decreased by nearly 11%.

Prices for new buildings in major cities fell by 1.1%, while the prolonged decline in the real estate sector continues.

The crisis in the real estate market began precisely then, when the COVID-19 pandemic started, which signaled one of the main drivers of economic growth and triggered the bankruptcy of dozens of developers.

This crisis negatively impacted the economy, eliminating jobs for millions of people. The government is trying to ensure the completion of the construction of the majority of housing, for which funds have already been raised, but sales remain weak, regardless of a number of measures aimed at attracting families to the market.

As the majority of Chinese families have their wealth in real estate, the weak housing market has become a significant factor, negatively impacting consumer spending. In July, retail sales increased by 3.7%, which is the lowest growth rate in seven months, and decreased from 4.8% in June.

The unemployment rate rose to 5.2% from 5%, as university graduates began to look for jobs.

Although consumer prices rose by 0.4% in July compared to the previous month, wholesale prices fell by 3.6% year-on-year, which is yet another indicator of weak demand.

Tags: China/Economy