The world’s second-largest economy can’t seem to shake off troubles related to its property sector, even as new data shows an increasingly confident consumer.
Data released Thursday shows China’s fixed-asset investment expanded by 3.6% year-over-year in the first half of 2024, falling short of 3.9%.
The weak data was mainly fueled by slowing infrastructure investment, according to analysts from Goldman Sachs, who pointed to a drag from heavy rainfall and flooding.
Meanwhile, real estate investment remains the economy’s key sore spot, with a 10.8% year-over-year fall.
The data shows new-home prices across 70 of the country’s biggest cities fell 5.3% year-over-year in July, following a 4.9% decline in June.
China’s housing market has been battered by slowing property sales and starts in the last few years, and its struggles seem far from over as a sizable portion of its available housing stock remains empty.
One bright spot was retail sales, which increased 2.7% year-over-year in July, above analysts’ estimates and up from a 2% increase in June.
The jump was fueled by online sales, partly due to the 618 Online Shopping Festival online retail event, which came earlier and lasted longer than usual, the Goldman analysts said.
Slowing demand within China raised warning signs last month, especially as potential tariffs threaten the country’s strong exports.
The government has rolled out a range of new policies meant to stimulate consumer spending as well as raise household income in the last few months.
“We believe the urgency for incremental policy easing is increasing to counteract subdued domestic demand,” Golman analysts wrote, adding that otherwise, the country’s goal of an approximately 5% GDP growth rate for 2024 may be at risk.
“Following the pro-growth July Politburo meeting, we expect more demand-side easing measures in coming months — especially on fiscal, consumption and housing fronts — and maintain our forecast for sequential GDP growth to rebound in H2 from its Q2 low,” the analysts added.