China's economic recovery has encountered significant challenges in regaining its previous economic achievement. Recent data show that the economy has continued to fall short of general expectations.
Economic statistics from Reuters demonstrated, as reported by CNBC, that the COVID-19 stringent restrictions had a more significant impact than initially estimated.
China's unsatisfying economic data
Retail sales increased by 18.4%, which was less than the 21% increase predicted by experts. Against predictions of a 5.5% growth, fixed asset investment increased by 4.7%. According to the data, the industrial production sector expanded in April at a rate of 5.6% on a yearly basis, up 3.9% from March. According to a Reuters calculation, this result is insignificant when compared to the 10.9% anticipated.
In April, the Caixin China general manufacturing purchasing managers' index dropped to 49.5, its first reading under 50 in the previous three months.
The manufacturing PMI from the National Bureau of Statistics also decreased from 51.9 in March to 49.2 in April. For the month, imports also fell by 7.9%.
“China is in the stage of recovering, compared to last year, the numbers are positive, as we just saw, but is the recovery good enough for the market, is the recovery good enough to meet investors’ expectations? That’s the big question here,” Winnie Wu - a Chinese equity strategist at BofA Securities China, told CNBC’s “Street Signs Asia.”
“It’s not good enough to meet investors' expectations. That’s a problem,” Wu said. She also added that the economic development motivation from Chinese consumers’ pent-up demand appears to be fading away.
Wu's above statements indicate that she doesn't think the newly revealed data was reliable enough to exceed investors' expectations. She further stated that the country's consumer demand has slowed and that it will take time for confidence in the economy and jobs to return to their previous levels.
China's economic stock data
The stocks of a number of the major corporations in China were also impacted by the nation's economic prospects. The majority of this year's gains in China's stocks have been reduced. The Shenzhen Component experienced a 9.5% decline from its peak in early February, declining by 4.67% quarter over quarter and just increasing 1.48% year over year.
The Shanghai Composite SSE Composite Index (SHA: 000001) is also down by 0.60%, confirming the economy's all-encompassing losses that are being suffered in the economy.
Record-high rates of youth unemployment
The unemployment rate for young people, considered as those between the ages of 16 and 24, was 20.4% in the most recent data which set a new record high for unemployment rate in China.
Investors and many others view this data as a leading signal. “Many people, investors see this as a leading indicator. If the younger people are unable to get jobs and don’t have income security, where is the confidence, where is the consumption recovery coming from?” Wu stated.
Xiangrong Yu, the top economist for Citi in China, said youth unemployment "remains a headache". He claimed that although the most recent survey's jobless rate decreased from 5.3% in March to 5.2% in April, the number of young people without jobs might easily increase rather than decrease due to the upcoming graduate season.
Solutions for China’s stable economic recovery
A number of monetary policies are being implemented by the People's Bank of China (PBoC) in an effort to revive the economy.
The most recent data on China's economic trajectory present a contrasting image, with services continuing to strengthen the nation's economy. According to Xiangrong Yu, Citi's head economist for China, the government is probably taking "decisive" measures to stimulate the economy. He added, "With China already outside the sweet spot of reopening".With a lack of urgent government action, there may be less prospect for a sustainable economic recovery.