China’s July eco­nomic data down­beat af­ter signs of hope in June

The Pak Banker - - BUSINESS -

China's econ­omy likely showed re­newed signs of weak­ness in July af­ter a brief pick-up in June, Reuters polls showed, re­in­forc­ing ex­pec­ta­tions that Bei­jing will need to roll out more pol­icy sup­port to meet its full-year growth tar­get. Panic selling in the coun­try's stock mar­kets early in the month also likely chilled con­sumer and busi­ness con­fi­dence, though un­prece­dented gov­ern­ment sup­port mea­sures ap­pear to have stemmed the rout for now.

A raft of data this week­end and next week is ex­pected to show do­mes­tic and ex­port de­mand re­mained slug­gish, weigh­ing on fac­tory ac­tiv­ity, while new loans could fall sharply, pos­si­bly as Bei­jing pressed banks to sup­port the stock mar­ket.

"The real econ­omy, though sta­bi­liz­ing at a low level, is still strug­gling to turn around," said Tao Wang, an economist at UBS in Hong Kong, adding that she ex­pected the cen­tral bank to cut in­ter­est rates again to­ward the end of Septem­ber.

China's ex­ports were seen drop­ping 1.0 per­cent in July com­pared with a year ear­lier, af­ter grow­ing 2.8 per­cent in June, a me­dian forecast of 31 an­a­lysts polled by Reuters showed.

Un­ex­pected growth in June had fu­eled hopes that global de­mand was fi­nally im­prov­ing, but of­fi­cial and pri­vate fac­tory sur­veys in re­cent days have shown ex­port or­ders shrank in July, point­ing to more weak­ness in com­ing months. Dragged in part by a tum­ble in global com­mod­ity prices, im­ports were seen shrink­ing for the ninth straight month, slip­ping 8.0 per­cent in July from a year ear­lier. Im­ports had tum­bled 6.1 per­cent in June.

Re­flect­ing slug­gish eco­nomic ac­tiv­ity, pro­ducer prices were es­ti­mated to have slid 5 per­cent in July from a year ear­lier, the big­gest drop since the global fi­nan­cial cri­sis.

Con­sumer in­fla­tion also likely stayed muted, run­ning at 1.5 per­cent on a yearly ba­sis, com­pared with June's 1.4 per­cent. A cool­ing hous­ing mar­ket, un­even ex­ports and lack­lus­ter in­vest­ment growth have weighed on China this year, with eco­nomic growth ex­pected to cool from 7.4 per­cent in 2014 to 7 per­cent in 2015, the slow­est in a quar­ter of a cen­tury.

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