China’s economy reports slow progress in July
China’s economy showed stable growth in July, with consumption boosted by holiday season spending, according to new figures from the National Bureau of Statistics (NBS).
Recovery of domestic consumption continued; total retail sales of consumer goods recorded 2.7% growth year-on-year in July. On a monthly basis, the growth rate outpaced June by 0.7 percentage point, according to the report.
Sectors such as transportation, warehousing and postal production grew faster than that of the services industry as a whole.
NBS spokeswoman Liu Aihua commented: “The foundation for the recovery of the consumer market will be further solidified with the implementation of a combination of policies in order to increase people’s income and consumption demands.
“Investment is another important driving force of domestic demand. China’s fixed-asset investment in the manufacturing industry rose 9.3% year-on-year during the January-July period, faster than that of investment in infrastructure and real estate development.”
However, China’s consumer price growth rose more than expected in July, rebounding to a five-month high. The consumer price index (CPI), a key gauge of inflation, grew by 0.5% year-on-year in July, compared with an increase of 0.2% in June, the NBS said.
The figure was above the expected 0.29% growth projected by economists polled by Chinese financial data provider Wind.
Within the CPI, food prices in China remained unchanged in July from a decrease of 2.1% in June, while non-food prices increased during the month.
According to ING’s chief economist for Greater China, Lynn Song, the increase was mainly due to food prices finally ending deflation to return to a flat reading.
“Conditions are in place to see inflation trend a little higher in the coming months, but it should not impede further monetary easing,” Lynn said. “With low inflation and weak credit activity, domestic factors continue to favour further monetary policy easing.
“We continue to look for at least one more rate cut this year with the potential for more if global rate cuts accelerate.”
Meanwhile, China’s producer price index (PPI) – which measures the cost of goods at the factory gate – slipped by 0.8% in July, falling for the 22nd consecutive month, having also fallen by 0.8% in June.
The reading was in-line with the expected 0.78% decrease projected by Wind, with the NBS pointing to insufficient market demand and downward trends in prices for some international bulk commodities.
Elsewhere, China’s core inflation, which excludes food and energy prices, rose by 0.4% per cent in July, compared with a year earlier.
Money laundering rules tightened up
For the first time, China’s judicial authorities have said that cryptocurrencies, online game coins and tipping during live streaming would be considered money laundering. It is the first time the government has revised laws in order to target the use of virtual assets.
The Supreme People’s Court and the Supreme People’s Procuratorate said that the 13 revisions to the code would take effect immediately.
The transfer and conversion of criminal proceeds and their benefits through virtual asset transactions and financial asset exchanges would be covered under regulations that prohibit “covering up and concealing the source and nature of criminal proceeds and their benefits by other means”, the Supreme People’s Court said.
It added: “In recent years, there has been growth of online platforms being used for money laundering through virtual rewards via live streaming and gaming.
“Virtual currency, game coins, internet platforms and payments through live streaming have become new money-laundering channels, showing more complex and hidden networking and chainlike characteristics.”
In February, authorities in Shanghai charged four live streamers with money laundering after they exchanged virtual gifts and rewards that were found to be part of an illegal fundraising scheme worth 1.2 billion yuan ($168 million).
And in 2021, authorities in Shanghai also found that an ‘underground bank’ had engaged in illegal exchange of foreign currencies worth 2.5 billion yuan over six years using game cards – prepaid cards that allow users to buy virtual currency for online games.
The Supreme People’s Procuratorate acts as a public prosecutor for criminal cases, conducting both the relevant investigations and prosecutions of such cases. The agency also reviews the legal rulings of the local and special procuratorates.
