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China’s economic activity again weakened in September: China Beige Book

The People’s Bank of China is under pressure to cut bank interest rates and reserve requirements as growth slows in the world’s second-largest economy.

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China’s modest economic rebound appeared to have stalled in September, with retail sales and pricing power as well as manufacturing production and loan growth weaker than last month, China’s Beige Book monthly survey released on Friday showed.

The setback will heighten concerns about sluggish growth in the third quarter, heightening the risk that the world’s second-largest economy will miss the central government’s 5% growth target. Economists still expect September data to remain relatively weak, with most data pointing to a further stabilization of the economic slowdown.

A number of economic indicators in August highlighted new signs of China’s economic slowdown. Indeed, last month’s official retail sales and industrial production data beat expectations, confirming encouraging signs from other data points – from inflation rates to the purchasing managers’ index, often seen as a leading indicator.

“Retail spending slows (September). Food and luxury goods saw the biggest declines, China Beige Book survey managers said in a statement on Friday. “The results of ‘retaliation spending’ in the service sector are mixed: Tourism is strong as the Mid-Autumn Festival approaches, but sales are down sharply for hotel companies and chain restaurants.”

China Beige Book managers said the September survey results were based on a survey of 1,330 companies, with private companies and state-owned companies accounting for half each, but with slightly more large companies than small and medium-sized enterprises.

On Friday, China began its annual week-long holiday to mark the National Day on October 1, which this year coincides with the Mid-Autumn Festival, also known as the Mid-Autumn Festival or Mid-Autumn Festival. During the first “Golden Week” holiday since international travel resumed, outbound tourism surged. Trip.com said bookings in some foreign destinations have increased 20 times compared with the same period last year.

Real estate slumps

One of the more important findings in the privately administered survey was that corporate borrowing fell back to “very low levels” amid loan rejections and a spike in average lending rates, despite a number of initiatives by the People’s Bank of China to lower borrowing costs. .

The China Beige Book survey, released ahead of the release of official monthly data, showed that mainland banks have become more open to risk amid fears of wider contagion from a wider crackdown on debt problems plaguing Chinese property developers. alert.

Beijing is due to release its official purchasing managers’ index on Saturday. Money supply data is scheduled to be released on October 11, while monthly inflation and trade data are tentatively scheduled for October 13. A slew of activity data and China’s third-quarter economic growth data are expected on October 18.

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China’s troubled property sector showed signs of further deterioration in September.

“Homebuilders said prices contracted directly this month as sales slowed. Real estate agents reported soft prices and sales remained flat despite a sharp drop in mortgage rates,” the China Beige Book said.

“Problems for commercial real estate have deepened, with price gains narrowing sharply and the pace of transactions also falling sharply,” survey managers added. They said their proprietary index of fiscal activity turned positive but the results so far were “closer to To stay alive, not to breathe fresh air”.

Factory activity sluggish

Respondents’ export order growth fell to the lowest level since March, highlighting the external pressure on China from slowing global demand and exacerbating China’s woes of weak domestic demand.

So far this year, the onshore RMB exchange rate has fallen by about 5.5% against the US dollar.exist statement on wednesday According to CNBC, the People’s Bank of China reiterated after the quarterly meeting of the Monetary Policy Committee that it will “resolutely prevent the risk of currency overshooting and maintain the basic stability of the RMB at a reasonable and balanced level.”

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Nonetheless, although domestic orders maintained growth momentum, production growth slowed slightly compared with August. China’s Beige Book revenue index fell in September, showing that profit growth weakened more significantly than in August.

Still, private surveys found that while inflation may have slowed in September – with input costs, sales prices and wage indices all falling from the previous month – price indicators remained higher than a year ago, while input cost inflation remained flat.

“Reports that China is facing deflation are still exaggerated,” said the China Beige Book survey manager.

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