China econ­omy sees pro­duc­tion in­crease

The Myanmar Times - - International Business -

CHINA’S in­dus­trial out­put and re­tail sales growth ac­cel­er­ated in Au­gust, gov­ern­ment sta­tis­tics showed yes­ter­day, with both of them ex­ceed­ing ex­pec­ta­tions in en­cour­ag­ing signs for the world’s sec­ond-largest econ­omy.

In­dus­trial pro­duc­tion rose 6.3 per­cent year-on-year, the Na­tional Bureau of Sta­tis­tics (NBS) said, faster than July’s 6pc and above the me­dian forecast of 6.2pc in a Bloomberg News poll of econ­o­mists.

Re­tail sales, a key mea­sure of con­sumer spend­ing, rose 10.6pc in Au­gust, the NBS said, also ahead of ex­pec­ta­tions and the July fig­ure.

Bei­jing is look­ing to re­tool the econ­omy from a reliance on in­vest­ment spend­ing and ex­ports to one driven more by con­sumer de­mand, but the tran­si­tion has proven bumpy and gross do­mes­tic prod­uct growth has been slow­ing.

China is a key driver of the world econ­omy but grew at its slow­est rate in a quar­ter of a cen­tury last year, and has de­cel­er­ated fur­ther since then.

“In Au­gust ... some in­di­ca­tors picked up, ef­forts of cut­ting over­ca­pac­ity, re­duc­ing in­ven­tory, delever­ag­ing, low­er­ing costs and strength­en­ing weak links achieved no­table re­sults,” said NBS spokesper­son Sheng Laiyun.

“The na­tional econ­omy has achieved mod­er­ate but steady and sound de­vel­op­ment,” he added, but urged cau­tion.

“We must be aware that the do­mes­tic and ex­ter­nal eco­nomic con­di­tions are still com­pli­cated and se­vere with many in­sta­bil­i­ties and un­cer­tain­ties,” he said.

Fixed as­set in­vest­ment, a gauge of in­fra­struc­ture spend­ing, was up 8.1pc in the first eight months of the year, match­ing the fig­ure for the Jan­uary-July pe­riod.

Re­tail sales beat ex­pec­ta­tions of 10.2pc in a Bloomberg News poll of econ­o­mists, while fixed as­set in­vest­ment was ahead of the 7.9pc es­ti­mate.

But an­a­lysts were cau­tious about the fig­ures, and in­vestors gave them a mixed re­sponse, with the bench­mark Shang­hai Com­pos­ite In­dex end­ing only marginally higher.

“This data fits with our long-run­ning view that the de­layed im­pact of ear­lier pol­icy eas­ing means that a stronger sec­ond half to this year is likely,” Ju­lian Evans-Pritchard, China economist at Cap­i­tal Eco­nom­ics, said in a note.

But he said that fur­ther mon­e­tary eas­ing was “un­likely in the near-term”, so that “this uptick in eco­nomic ac­tiv­ity is likely to fiz­zle out go­ing into next year”.

Bei­jing has listed re­duc­ing over­ca­pac­ity and ex­cess in­ven­tory and cut­ting down bor­row­ing as top pri­or­i­ties, with the coun­try’s ail­ing steel in­dus­try – ac­cused by US and Euro­pean ri­vals of dump­ing on world mar­kets – a key tar­get.

Au­thor­i­ties have set a goal to cut 45 mil­lion tonnes of an­nual steel ca­pac­ity this year, with the of­fi­cial com­mu­nist mouth­piece Peo­ple’s Daily last month say­ing around 21 mil­lion tonnes had been elim­i­nated by July.

But ac­tual pro­duc­tion of crude steel was up 3pc year-on-year in Au­gust, the NBS fig­ures showed, ac­cel­er­at­ing from 2.6pc the pre­vi­ous month.

“We ex­pect in­vest­ment to re­main un­der pres­sure in the rest of the year be­cause of slower real es­tate con­struc­tion and spare ca­pac­ity in key sec­tors,” Louis Kuijs, head of Asia eco­nom­ics at Ox­ford Eco­nom­ics, wrote in a note.

“But with in­dus­trial prof­its re­cov­er­ing re­cently and in­vest­ment it­self also, in Au­gust, the down­ward pres­sure should di­min­ish.” –

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