According to the monthly China Beige Book survey, China’s small economic rebound has stalled in September. The survey reveals that retail sales, pricing power, manufacturing production, and loan growth were weaker in September compared to the previous month. This setback raises concerns about weak third-quarter growth and the possibility of falling short of the government’s 5% growth target. The survey also highlights that corporate borrowing has fallen to very low levels and loan rejections and average loan rates have spiked. This is despite efforts by the People’s Bank of China to lower borrowing costs.
In addition, the survey reveals that China’s property sector has deteriorated further in September. Home builders reported contracting prices and slower sales, while commercial property faced price gains narrowing sharply and a decline in transactions. Export order growth also declined to its weakest level since March, highlighting the external pressures on China from slowing global demand. Despite these challenges, the survey found that inflation in September likely slowed, but price gauges were still higher compared to last year.
Overall, the survey suggests that China’s economic rebound is facing significant headwinds and raises concerns about the country’s ability to achieve its growth targets. The struggling property sector, declining export orders, and weakening corporate borrowing all point to a challenging economic environment. As a result, there is increasing pressure on the People’s Bank of China to further lower interest rates and reserve rate ratios for banks to stimulate growth. However, it remains to be seen whether these measures will be sufficient to reverse the slowdown in the world’s second-largest economy.