China’s economic growth slowed in August, raising concerns about the global recovery as countries struggle to get the Delta variant of COVID-19 under control.
China’s retail sales cooled to 2.5% from a year ago, much lower than the 7% forecast by economists, as consumers cut back on spending during the summer. Construction investment contracted 3.2%, reflecting the government’s steady tightening of property restrictions.
China’s slowing growth underlines how the spread of the Delta variant is challenging the world’s economic recovery from the pandemic. The slowdown in construction, which pushed China’s steel output to a 17-month low in August, is rippling across the global economy by reducing Chinese demand for commodities such as iron ore.
China has introduced stringent new curbs to halt an outbreak of the Delta variant, leading restaurant and catering sales to contract 4.5% in August after rising 14.3% in July this year.
China’s 10-year government bond futures climbed for the first time in three days as the weak data revived expectations for policy easing. Many economists now expect the People’s Bank of China to cut the reserve requirement ratio for banks again in coming months following a surprise reduction in July.
