China data shows a hint of slowdown

BEIJING: China’s economic momentum broadly held up in April with industrial production exceeding forecasts, though slowing investment signaled a moderation in the coming months.

Industrial output rose 7% in April from a year earlier, the statistics bureau said, versus a projected 6.4% in a Bloomberg survey and 6% in March.

Retail sales expanded 9.4% from a year earlier, versus a forecast 10%. Fixed-asset investment rose 7% year-on-year in the first four months, compared with an estimated 7.4%.

The reports are among the first official readings unaffected by the Lunar New Year holiday, which skewed year-on-year comparisons for the first three months. The mixed data confirm a picture of an economy already in a gradual cyclical slowdown, at a time when it is facing risks ranging from trade tensions with the US to an ongoing campaign to curb excessive debt.

“Regulatory tightening in China’s financial system is starting to drag on growth,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. “Fixed-asset investment, especially infrastructure, may slow further in the coming months as tighter financial regulations, especially regarding shadow banking, are starting to bite.”

A key indicator of performance for the rest of the year lies in the real estate sector. Property development investment in the first four months expanded 10.3% from the same period a year earlier.

“Infrastructure investment has been slowing for a while but property investment is still holding up and we’re not expecting that to slow until going into the second half of this year,” Donna Kwok, a senior China economist at UBS Group AG in Hong Kong, said in a Bloomberg Television interview. “Moderation is underway but it’s taking its time.” — Bloomberg