China retail sales growth slowed in October
China’s retail sales growth slowed last month, government data showed yesterday, in a worrying sign for domestic demand in the world’s secondlargest economy. Retail sales in October grew 10 percent from a year earlier, missing expectations for sales to match the previous month’s pace of 10.7 percent, the National Bureau of Statistics (NBS) said. Other data for last month showed industrial output growth of 6.1 percent, unchanged from September and slightly below forecasts in a Bloomberg News survey of economists. China is a key driver of the world economy but its expansion has slowed significantly from the double-digit years of the past. Now Beijing is seeking to make a difficult transition away from its dependence on exports and heavy industry towards consumption as the key driver of the economy, but the process is proving bumpy.
“It could be the consumer participation in growth is declining,” independent Hong Kong-based analyst Andrew Collier told Bloomberg. “It’s harder for the government to control retail sales than (fixed-asset investment) or industrial production, which is heavily statedriven.” Beijing has ramped up fiscal stimulus and loose credit to keep the economy on target to meet its 6.5-7 percent growth target for the year. Fixedasset investment, a gauge of infrastructure spending, rose 8.3 percent in the first 10 months of the year. The NBS figures showed an October jump in realestate investment, which grew 6.6 percent in the first 10 months, compared with 2.0 percent in the same period last year. “Growth momentum likely got help from steady property investment in October,” said Zhao Yang of Nomura in a note. But concerns about surging housing prices caused authorities to roll out cooling measures in major cities last month, which will slowly take effect and lead to a moderate slowdown in growth next year, he added.
The factory output figures-which showed accelerating growth in output of steel, glass and cement last monthreflected an increase in investment spending, said Julian Evans-Pritchard of Capital Economics. “Although state-sector investment remains strongest, much of the recent recovery has come from a marked rebound in private investment, which had stagnated earlier this year,” he said. But recent policies to rein in credit growth and the hot property market will cause those drivers to “fizzle out” early next year, he added.
Chinese bank lending almost halved month-on-month in October, official data showed, after a credit surge in August and September sparked official alarm about debt risks.
Investors were unfazed by the data, buying infrastructure and coal shares as the benchmark Shanghai index climbed yesterday, closing above the symbolic 3,200-point level for the first time in almost 10 months. NBS spokesman Mao Shengyong said the slowdown in consumption growth was due mainly to a higher base of comparison last year when automobile sales surged thanks to government tax cuts. — AFP