China April eco­nomic ac­tiv­ity data dis­ap­points, hik­ing re­cov­ery doubts

Pakistan Observer - - ECONOMY WATCH -

—China’s in­vest­ment, fac­tory out­put and re­tail sales all grew more slowly than ex­pected in April, adding to doubts about whether the world’s se­cond-largest econ­omy is sta­bi­liz­ing. Growth in fac­tory out­put cooled to 6 per­cent in April, the Na­tional Bu­reau of Statis­tics (NBS) said on Satur­day, dis­ap­point­ing an­a­lysts who ex­pected it to rise 6.5 per­cent on an an­nual ba­sis af­ter an in­crease of 6.8 per­cent the prior month. China’s fixedas­set in­vest­ment growth eased to 10.5 per­cent year-on-year in the Jan­uary-April pe­riod, miss­ing mar­ket ex­pec­ta­tions of 10.9 per­cent, and down from the first quar­ter’s 10.7 per­cent.

Fixed in­vest­ment by pri­vate firms con­tin­ued to slow, in­di­cat­ing pri­vate busi­nesses re­main skep­ti­cal of eco­nomic prospects. In­vest­ment by pri­vate firms rose 5.2 per­cent year-on-year in Jan­uary-April, down from 5.7 per­cent growth in the first quar­ter. “It ap­pears that all the en­gines sud­denly lost mo­men­tum, and growth out­look has turned soft as well,” Zhou Hao, economist at Com­merzbank in Sin­ga­pore, said in a re­search note. “At the end of the day, we have ac­knowl­edge that China is still strug­gling.” Reuters re­ported on Satur­day that China’s bank­ing reg­u­la­tor has sent an ur­gent no­tice to banks telling them to clear bot­tle­necks hold­ing back lend­ing to pri­vate firms.

In its data an­nounce­ment, the statis­tics bu­reau said “Be­cause the to­tal amount of pri­vate in­vest­ment is rel­a­tively large, its con­tin­ued slow­down could re­strain sta­ble growth, and re­quires a high de­gree of at­ten­tion.” Re­tail sales growth in April, which cap­tures both pri­vate and govern­ment pur­chas­ing, rose 10.1 per­cent on an an­nual ba­sis, slower than ex­pected. An­a­lysts had fore­cast sales would rise 10.5 per­cent on an an­nual ba­sis, the same per­cent­age in­crease as re­ported for March. It was up­beat March data that sparked hopes China’s econ­omy was pick­ing up in a wake of a more than year-long blitz of fis­cal, mon­e­tary and ad­min­is­tra­tive stim­u­lus mea­sures. A re­cov­er­ing prop­erty mar­ket has also boosted de­mand for raw ma­te­ri­als, giv­ing a boost to long ail­ing heavy in­dus­tries such as steel mills.

But much of the data on April, which in­cluded weaker-than-ex­pected ex­ports and im­ports, plus soft fac­tory ac­tiv­ity sur­veys, con­tin­ued to un­der­line lin­ger­ing weak­ness in the broader econ­omy.

The only bright spot was in­vest­ment in hous­ing, which grew 9.7 per­cent in April from a year ear­lier, ac­cord­ing to Reuters cal­cu­la­tions, keep­ing even with March’s pace. China’s eco­nomic growth has cooled to 25-year lows, weighed down by a com­bi­na­tion of weak de­mand at home and abroad, fac­tory over­ca­pac­ity and in­creas­ing amounts of debt. The govern­ment has made re­duc­ing the ca­pac­ity glut one of its top pri­or­i­ties, and has vowed to put “zom­bie” com­pa­nies out of busi­ness. But econ­o­mists ex­pect au­thor­i­ties to move slowly to avoid a sharp jump in un­em­ploy­ment.—Agen­cies

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