The real estate market, investment and exports, which have been key growth engines for China's economy, are experiencing turbulence, reported WSJ. In Q2 2022, China's GDP increased by 0.4% year-over-year, according to the National Bureau of Statistics. The second quarter results prompted some investment banks to lower their growth forecasts for China's economy. Société Générale cut its growth forecast for the full year from 4.1% to 2.7%. Barclays expects China's economy to grow 3.1% this year, compared to the previous forecast of 3.3%.
Official data show that the fall in China's new home prices widened in June from May, while sales of land for future development - a major source of income for local governments - fell sharply in June. China's housing market has been an important economic driver for much of 2020 as the Chinese put their money into real estate as an investment asset.
In June, Chinese exports rose 17.8% year on year. Although Chinese exports have grown faster than expected, economists predict that Western demand, which has kept Chinese factories running, will decline as politicians raise interest rates to contain the runaway inflation that will affect the economy.
In January-May 2022, Chinese softwood lumber imports fell 16.3% year-o-year, up to 6.5 million m3. In particular, supplies from Russia, according to Lesprom Analytics, decreased by 6.4%, to 4.4 million m3. If in January-February the volume of exports of softwood lumber from Russia to China increased by 8.2%, then in March-April exports fell by 13.3%, and the decline grew every month and in May amounted to 22.0%.
In January - May, the volume of imports of softwood logs to China fell by 39.4% year-o-year, to 12.2 million m3.
In January - May, China reduced pulp imports by 6.7% year-o-year, to 12.4 million tons. Exports from Russia decreased by 10.0% to 591 thousand tons.
Russian forest based industry was cut off from the markets of Europe, Japan and the U.S. because of the Russian invasion of Ukraine. The slowdown in the Chinese economy does not allow Russian companies to redirect supplies from Europe to the East, causing them significant damage. In July, sawmills in the North-West of Russia began to stop production.
