CHINA’S FACTORY OUTPUT RISES
Beijing supports economy in the face of US tariffs
BEIJING: China reported betterthan-expected industrial output and retail sales on Friday, but a key investment gauge fell to a fresh record low, highlighting the challenges facing Beijing as it tries to support the economy in the face of rising US tariffs.
The data, along with earlier softer readings on trade and credit growth, reinforce consensus views that the world’s second-largest economy is cooling but not at risk of a sharp slowdown yet.
Industrial output rose 6.1 per cent in August from a year earlier, the National Bureau of Statistics (NBS) said, slightly more than analysts had expected and a tick better than July.
But production of key goods including motor vehicles and transport equipment actually fell. Output of cars barely grew, while crude steel production increased by just a third of the pace in the previous month.
Retail sales rose 9.0 per cent on-year. Analysts had expected a gain of 8.8 per cent, unchanged from July.
Fixed-asset investment growth slowed to 5.3 per cent in Januaryaugust from the same period a year earlier, weighed down once again by slowing infrastructure growth.
Analysts polled by Reuters had expected a reading of 5.5 per cent, in line with the previous all-time low announced last month.
“The August activity and spending data were a mixed bag. On balance though, they do little to change our view that growth remains on a downward trajectory,” Capital Economics said in a note, adding its own gauge suggested industrial output was much weaker than the official data.
Private sector fixed-asset investment rose 8.7 per cent in January-august, compared with an increase of 8.8 per cent in the first seven months. Private investment accounts for about 60 per cent of overall investment in China.
Growth in infrastructure spending, a powerful economic driver last year, slowed again to 4.2 per cent in the first eight months of the year, compared with a rise of 5.7 per cent in Januaryjuly. China got off to a strong start this year, but its economic outlook is being clouded by the escalating US trade dispute and cooling domestic demand, triggered in part by a regulatory crackdown on riskier financing.
Beijing is trying to accelerate infrastructure investment but analysts warn it will take some time for the benefits to kick in, with economic conditions expected to get worse before they get better.
China’s state planner recently warned that the country’s investment growth may weaken even further in the future and authorities should step up fiscal and financial measures to give it a boost.
Employees assemble remote controls of air conditioners at a factory in Hefei, China.