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China’s Economy July 2022

China's economy is still facing significant challenges as July has seen a rise in new outbreaks of COVID-19 along with the downcycle of the property sector and slowing global growth. There has been mixed growth in most economic indicators, which has been below expectations.

The National Bureau of Statistics (NBS) reported Monday that retail sales of consumer goods, a major indicator of the country's consumption strength, increased 2.7 percent year on year in July.

NBS data show the country's sales of consumer goods in July totaled around 3.59 trillion RMB (about USD 532.6 billion). In the first seven months, China's total retail sales of consumer goods stood at 24.63 trillion RMB, down 0.2 percent year on year.

Retail sales were bolstered by online consumption. In the January-July period, online sales of physical goods climbed 5.7 percent year on year.

Moreover, data showed that sales of major supermarkets grew 4.1 percent year on year in the first seven months, while that of convenience stores rose 4.6 percent from a year ago.

With policies to boost demand, the decline in catering revenue has narrowed. Revenues in the sector fell 1.5 percent year-over-year in July, narrowing by 2.5 percentage points from June.

The pro-consumption policies, supportive measures for enterprises, and improved consumption environment will continue to boost China's consumption.

The first seven months of 2022 saw China's value-added industrial output, an important economic indicator, rise by 3.5 percent compared to the same period a year earlier.

The industrial output measures the activity of designated large enterprises with an annual business turnover of at least 20 million RMB (about USD 2.96 million).

In July alone, industrial output rose 3.8 percent year on year and expanded 0.38 percent over June, according to the NBS.

In a breakdown by ownership, the value-added output of state-controlled enterprises led the gains with a year-on-year growth of 5.4 percent in July, followed by share-holding enterprises.

During the period, utilities' production and supply reported the fastest year on year growth rate of 9.5 percent among the three major sectors, outpacing mining and manufacturing.

Based on the NBS data, the high-tech manufacturing sector grew by 5.9 percent year-over-year, 2.1 percentage points faster than the overall industrial sector.

Other major economic indicators, including the index of services production and fixed-asset investment, also posted year-on-year growths, the NBS data showed.

China's property development investments dropped 6.4% in the first seven months of 2022 compared to last year's period.

The total property investment in the period stood at 7.95 trillion RMB (about USD 1.18 trillion). Residential building investment dropped 5.8 percent year over year to 6.02 trillion RMB.

New stabilization policies are being implemented by the government as the real estate sector goes through a period of sharp decline.

China’s overall unemployment rate continued to decline in July, from 5.5% in June to 5.4%, the lowest jobless rate since January. The pressure on the labor market is still great, and it requires the government to implement various measures to stabilize employment.


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