China’s Fragile Economic Rebound Hits Roadblock, Escalating Growth Concerns

China’s tentative economic recovery appears to have hit a snag in September, with weakening retail sales, manufacturing production, pricing power, and loan growth, according to the monthly China Beige Book survey released on Friday.

This setback raises concerns about sluggish third-quarter growth, heightening the risk of China falling short of the central government’s stated 5% growth target.

Economists anticipate that September data will remain relatively soft, with most indicators pointing to a further stabilization in the economic slowdown.

While August economic indicators had suggested signs of recovery, such as strong official retail sales and industrial production data, September’s numbers have disappointed.

Retail spending slowed notably in September, particularly in food and luxury categories, while services, including travel, experienced mixed results.

China Beige Book’s September findings were based on a survey of 1,330 firms, evenly divided between private and state-owned enterprises.

The data showed that corporate borrowing had dropped to very low levels, with higher loan rejection rates and average loan rates despite the People’s Bank of China’s efforts to lower borrowing costs.

China’s troubled property sector also showed signs of worsening in September, with home prices contracting, weaker real estate prices, and sluggish sales, despite a significant drop in mortgage rates.

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Commercial property faced even greater challenges, with narrower price gains and declining transaction activity.

Export order growth among survey respondents weakened, reaching its lowest level since March, reflecting external pressures on China from slowing global demand in addition to domestic demand challenges.

China’s currency, the yuan, has depreciated by approximately 5.5% against the dollar this year, prompting the People’s Bank of China to reaffirm its commitment to maintaining currency stability.