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Latest China data shows policy pay-off, but no ‘animal spirit’ in private sector

EconomyChina Economy

China’s piecemeal stimulus paying off slowly, but property still bleak and private sector ‘lacks that animal spirit’

China’s economy showed signs of vigour in August, with both retail sales and manufacturing picking up, but ‘road to recovery a bumpy one’Some analysts are still awaiting a strong policy signal, or a ‘bold reform plan’, from Beijing to restore confidence in the private sectorChina's economic recoveryMia NulimaimaitiPublished: 10:02am, 15 Sep, 2023Why you can trust SCMP

China’s economic recovery gathered pace in August as policymakers’ stimulus measures elevated consumption and manufacturing activity, but economists responded to Friday’s data release with calls for bolder moves to pull the real estate and private sectors out of the doldrums.

Retail sales rose by 4.6 per cent last month, year on year – higher than the 2.5 per cent seen in July – while the total value of industrial production climbed by 4.5 per cent in August, accelerating from a rise of 3.7 per cent in July, the National Bureau of Statistics (NBS) said on Friday.

Despite the upbeat performance in manufacturing and consumption, the contraction of China’s property sector deepened in August.

Investment in the property sector, which has been plagued by debt stress and weak confidence among homebuyers, continued to deteriorate, falling by 8.8 per cent in the first eight months of the year, compared with 8.5 per cent over the first seven months.

“Overall, today’s data suggests that China’s economy has started to improve from a depressed level,” said Larry Hu, chief China economist at Macquarie Capital. “But given the lack of animal spirit in the private sector, policy remains the only game in town.

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