After a strong start to the year, the Chinese economy is losing momentum. This is also indicated by the latest July data. At the same time, China’s share of EU imports has increased significantly.
Against the background of disappointing economic data, the Chinese central bank has tightened interest rates again. As the institute announced, the interest rate for loans with a one-year term was reduced by 0.15 points to 2.5 percent. It’s the second rate cut since June.
Also on Tuesday, the Beijing Statistics Office presented economic data that was mostly weaker than analysts had expected. According to the report, industrial production rose 3.7 percent year-on-year in July, below forecasts. Retail sales growth also slowed again – to just 2.5 percent. The ailing real estate sector saw investment fall by 8.5 percent.
Every fifth young Chinese cannot find a job
Surprisingly, the authority did not provide any information on the development of the recently very high youth unemployment. More than one in five young Chinese recently found no job. A spokesman for the statistics agency said the statistics would be suspended and revised.
“The main reason is that labor statistics need to be further optimized in light of economic and social development,” said Fu Linghui, spokesman for the National Bureau of Statistics. In particular, it is examining whether students who are looking for a job before graduation should be included in the labor statistics.
Chinese foreign trade had also not shown any signs of recovery recently: after sharp declines in the previous months, exports in July fell by 14.5 percent year-on-year, the customs authorities announced last week. The imports of the second largest economy fell by 12.4 percent. Both values were even worse than expected by analysts.
German share losses
Meanwhile, a new study draws attention to the growing importance of Chinese exports for Germany and Europe. China’s share of EU imports has “continuously and very significantly increased” over the past 23 years. This is the result of a study by the German Economic Institute, which examined the period from 2000 to 2022. Germany’s share of EU imports, on the other hand, has been declining “overall and in numerous demanding industrial product groups” since 2005.
The decline has recently accelerated in many areas. “Chinese share gains and German share losses often go hand in hand in many perspectives,” writes study author Jürgen Matthes. The “Handelsblatt” had previously reported on the study.
In terms of total goods imports, China’s share of EU imports rose from 2.6 percent in 2000 to 8.8 percent last year. The German share, on the other hand, fell from 14.3 to 12.5 percent in the same period. China’s share of the so-called sophisticated industrial goods such as machines, chemical or pharmaceutical products climbed from 2.5 percent (2000) to 13.0 percent (2022).
At the same time, Germany’s share fell from 17.7 percent to 15.5 percent. Matthes expressed concern about the finding: “A structural development could be imminent here, since the industrial German business model is currently under pressure due to high energy costs.”
Source: Stern
