China's Economy Faces Domestic Slump Despite Record Export Growth

China's economic landscape is witnessing a stark divergence between a booming manufacturing sector and a stalling domestic market. While exports are hitting record highs, internal drivers like consumer spending, property activity, and credit demand remain trapped in a cycle of weakness.

Domestic Consumption Hits a Multi-Year Low

The most alarming signal for China's economic health is the significant downturn in retail sales. According to a recent market strategy report by Jefferies, retail sales declined by 0.6% year-on-year in May. This reversal from the 0.2% increase recorded in April marks the first annual decline in retail sales since December 2022.

This contraction is deeply tied to eroding consumer sentiment. The consumer confidence index dropped to 89.0 in April, down from 91.6 in February. Despite various policy support measures introduced by the government to stimulate the economy, households remain cautious, opting for savings over spending. This reluctance is further evidenced by slowing credit growth; both Renminbi bank loans and private-sector credit growth cooled to 5.5% year-on-year in May, suggesting a widespread hesitation to borrow or invest.

The Property Sector: Continued Struggles and Local Stabilization

The real estate market, traditionally a cornerstone of China's GDP, continues to act as a drag on the broader economy. Data shows that residential floor space sold plummeted by 12.1% year-on-year between January and May. Even more critical is the drop in the value of property sales, which fell by 14.1% during the same period.

However, there are isolated signs of resilience. In China's tier-one cities, new home prices have increased for four consecutive months as of May. This suggests that while the national property market is in crisis, prices may have finally bottomed out in the country's most significant urban economic hubs.

Export Surge and the Semiconductor Boom

In sharp contrast to the domestic gloom, China's external sector is thriving. The export of goods rose by 19.4% year-on-year in US dollar terms, reaching $377 billion in May. Imports also showed strength, climbing 27.4% to $271 billion.

Un gran impulsor de este motor de exportación es el sector tecnológico, específicamente los semiconductores. Las exportaciones de circuitos integrados electrónicos experimentaron un asombroso aumento interanual del 111%, alcanzando la cifra récord de 35.500 millones de dólares en mayo. Al observar un periodo más amplio, los envíos de estos productos alcanzaron los 139.000 millones de dólares en los primeros cinco meses del año, lo que representa un incremento del 90% en comparación con el año anterior.

Puntos clave

• Economía de doble velocidad: China está experimentando una desconexión masiva en la que un sector manufacturero y de exportación de alto rendimiento es incapaz de compensar la caída del consumo interno.
• Debilidad del consumidor y del crédito: La disminución de las ventas minoristas y la caída de los índices de confianza del consumidor indican que la demanda interna no está respondiendo a las medidas de estímulo actuales.
• Exportaciones impulsadas por la tecnología: La industria de los semiconductores ha surgido como un salvavidas crítico, con las exportaciones de circuitos integrados creciendo más del 111% interanual.