How long before they stop reporting the numbers?

I’m just joking. I think. But if the trajectory of the world’s second-largest economy doesn’t inflect for the better, and soon, I do wonder if Chinese statisticians will come under even more pressure to paint a rosier picture.

Activity figures released on Saturday showed retail sales managed a mere 2.1% YoY gain last month. That was well short of consensus and the second-slowest pace since late 2022, when sales contracted as the Party grappled with a difficult decision to abandon “COVID zero” amid street protests against Xi’s harsh public health protocols.

Industrial output posted a 4.5% gain. That was the slowest since April. Cumulative investment likewise underwhelmed, rising 3.4% from January through last month. Property investment slumped 10.2%.

I should emphasize: These really are poor results. Beijing may well miss the annual growth target. Urban unemployment rose to 5.3% in Saturday’s data, the highest since February. You’re reminded that China stopped publishing the youth unemployment rate when it became an embarrassment to the Party.

Saturday’s release capped a wholly dispiriting round of data including another tepid read on imports, the slowest core consumer price growth in years and credit growth figures which showed, among other things, a 7.3% YoY M1 drop.

Suffice to say the spending impulse is more dead than “resting.” As ANZ’s top China analyst put it, “The bottleneck remains domestic demand.” That means rate cuts from the PBoC aren’t going to help, or not enough to matter anyway. The problem isn’t the cost of money. The problem’s demand for credit.

There are no shortage of calls for big-ticket fiscal stimulus — “helicopter” money, cash vouchers and so on. But the Party’s actually moving in the opposite direction on some fronts. For example, China raised the retirement age this week for the first time in seven decades. It was a necessary reform. Chinese are living longer than they were in the 1950s, when the fertility rate was higher and so on. Raising the retirement age was a demographic necessity. Still, it’s domestically unpopular, and consumer sentiment’s already abysmal.

To be clear: China’s economy remains dynamic and vibrant in some areas. It’s not the dystopia I sometimes make it out to be, but there’s no question that households are broadly pessimistic about the future, and it’s no secret why: Xi’s totalitarian turn dimmed the country’s prospects on multiple fronts, and the property crisis is an enormous albatross. Saturday’s data releases also showed new home prices fell 5.3% YoY in August, the sharpest decline since the spring of 2015. The MoM decline, 0.7%, was the 14th straight. So much for the rescue package.

An economist quoted by Bloomberg said there’s virtually no chance China can hit its 5% growth target for 2024 after August’s data “unless the top leadership is willing to launch a bazooka stimulus package.” Why Xi’s reluctant to go that route is something of a mystery, but one explanation says he wants to promote individual self-reliance. Handouts might send the wrong message in that regard. If that is, in fact, part and parcel of his thinking (“Thought”), it’s supremely ironic: This is the Communist party after all.

Whatever the case, the numbers Beijing released over the weekend were grim, and they don’t bode well for Q3 GDP. The Party’s running out of time. If they wait around until 2025, when external demand could slow and Western governments ratchet up protectionist measures, the only growth engine still firing (exports) could stall too.

Managing the transition from yesteryear’s blockbuster growth rates towards a more sustainable model driven by domestic spending was never going to be easy. But Xi’s making it harder than it needs to be.