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.

Een enorme drijfveer van deze exportmotor is de technologiesector, in het bijzonder halfgeleiders. De export van elektronische geïntegreerde schakelingen zag een verbluffende stijging van 111% op jaarbasis, met een recordbedrag van $35,5 miljard in mei. Als we naar de bredere tijdlijn kijken, bereikten de zendingen van dergelijke producten in de eerste vijf maanden van het jaar $139 miljard, wat een stijging van 90% betekent vergeleken met het voorgaande jaar.

Kernpunten

• Economie met twee snelheden: China ervaart een enorme discrepantie waarbij een hoogpresterende productie- en exportsector niet in staat is om de terugval in de binnenlandse consumptie te compenseren.
• Zwakke consumptie en krediet: Dalende detailhandelsverkopen en dalende consumentenvertrouwensindices wijzen erop dat de binnenlandse vraag niet reageert op de huidige stimuleringsmaatregelen.
• Technologie-gedreven export: De halfgeleiderindustrie is uitgegroeid tot een cruciale levenslijn, waarbij de export van geïntegreerde schakelingen met meer dan 111% op jaarbasis is gegroeid.