Floods, COVID Resurgence Slow Chinese Economy, eCommerce Creeps Up 4.4 Pct In July

With a new surge of COVID-19, China has seen its economy slowing, CNBC reported.

Individual consumer buying has seen a particularly sharp downturn, with the authorities’ efforts to build up consumption to drive economic growth not working, according to the report. Consumers have been cutting back on spending on everything from cars to cosmetics.

Online sales of physical consumer goods increased by 4.4 percent in July, which was below an average of about 21 percent for the past five years, the report stated.

Bruce Pang, head of Macro and Strategy Research at China Renaissance, told CNBC the downturn in spending can be attributed to the massive June shopping promotions. After that, there was a new rise in COVID-19 cases, resulting in logistics disruptions during travel restrictions in addition to floods and typhoons in July.

Several factors contributed, said the National Bureau of Statistics, per CNBC, “including the growing external uncertainties and the domestic COVID-19 epidemic and flooding situation.” The bureau noted that the economic recovery is still “unstable and uneven” overall.

Economists have cut their gross domestic product (GDP) forecasts for the second-largest global economy, according to the report. Goldman Sachs now expects 8.3 percent growth this year, which is a decrease from 8.6 percent previously, while Nomura predicts 8.2 percent growth, which is down from its last prediction of 8.9 percent.

Retail sales were up by 8.5 percent in July from last year, which was less than the 11.5 percent forecast, the report stated. Auto sales, which was the only category to decline in July, was down 1.8 percent, while cosmetics were growing slowly at 2.8 percent in July compared to a year ago, a downturn from its rise of over 13.5 percent from the prior month.

The period from April to June was somewhat stagnant for China’s economy. While the country reported 7.9 percent growth, it fell short of forecasts.

Read more: China’s Economy Shows Mixed Second-Quarter Momentum