Heard on the Street: China’s economy is still in serious trouble and more policy support, both fiscal and monetary, will be needed to avert an even steeper downturn next year
. The last big data release of 2021, published Wednesday, shows why.and the property sector still in deep trouble—although with tentative signs of a bottom in sales and some heavy industrial activity. China’s economy is still in serious trouble and more policy support, both fiscal and monetary, will be needed to avert an even steeper downturn next year. Growth numbers heading into the spring will at least be cast in a somewhat more flattering light compared with a weak year-earlier period.
As for the November data, the good news was mostly incremental. Industrial output crept upward for the second month in a row to 3.8% year-over-year growth from 3.5% in October. As in October, however, strength was concentrated in the mining and power sectors, which continue to rebound steadily after thethat forced widespread power outages in the early fall. Manufacturing growth edged up to 2.9% year over year from 2.5% in November, but it remains well below late summer levels of around 6%.
The news for consumers was even worse. After a modest rebound to 4.9% growth in October, retail-sales growth fell back to 3.9% last month—likely reflecting the impact of yet another limited coronavirus outbreak and authorities’ harsh response. The picture in housing, which remains the real key to turning the economy around and fending off financial risks, was mixed. On the one hand, prices in many medium-size cities fell again. And year-over-year growth in heavy industrial output, floor space sold and new starts all remain deeply negative. On the other hand, floor space sales ticked up marginally month over month. And while residential investment was down again year over year, the pace of decline eased for the first time this year.
On the whole, Wednesday’s data release still paints a deeply worrying picture as the year ends. Policy makers still have their work cut out for them to ensure things don’t worsen in 2022.China recorded a steep economic slowdown in the third quarter as its pandemic bounceback fades—and now, Beijing is taking on longer-term issues including household debt and energy consumption. WSJ’s Anna Hirtenstein explains what investors are watching.
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