Bei­jing sup­ports econ­omy in the face of US tar­iffs

The Gulf Today - Business - - FRONT PAGE -

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.

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