Chinese growth shows ‘signs’ of flagging, leaders probe problems
China’s Jan-May FDI up 1.3 pct to 345.59 bln yuan
BEIJING, June 14, (Agencies): Chinese economic growth showed signs of flagging in data released on Thursday as Beijing faces trade tensions with the United States as well as debt and pollution battles at home.
Industrial output and retail sales in the world’s number two economy slowed last month, while the central bank shied away from raising borrowing costs despite another hike by the US Federal Reserve.
“External instabilities and uncertainties are increasing,” said National Bureau of Statistics spokesman Mao Shengyong.
His comments come as weeks of negotiations between Beijing and Washington show no signs of a breakthrough, with Donald Trump due Friday to decide on whether to impose tariffs in billions of dollars worth of Chinese imports.
The US president stoked trade war fears by suggesting he will impose the measures, saying “China could be a little bit upset” in an interview on Fox News. China has pledged any tariffs will void progress made in the recent talks and has drawn up its own list of US targets.
“The trade friction does not solve any problem, it only makes the problem more complicated,” the NBS’s Mao said.
On Thursday the NBS said output at factories and workshops expanded 6.8 percent year-on-year, from 7.0 percent in April and short of estimates in a Bloomberg News survey.
The retail sector also slumped, providing some concern for leaders who are looking for consumers to drive economic growth and move away from the export and state investmentdriven model.
Sales growth slowed to 8.5 percent from 9.4 percent in April. It was also well short of the 9.6 percent forecast by analysts and maintained a downtrend seen over the past 12 months.
The People’s Bank of China decision not to lift the amount it charges to lend to banks indicated officials may be changing policy to combat slowing growth, analysts say.
The Fed hiked rates and lined up another two this year as the US economy picks up. Previous moves by the US central bank has prompted a similar move by Beijing.
“China’s new leadership was greeted by a much more challenging environment in 2018,” said Ting Lu, Chief China Economist at Nomura investment bank, adding Beijing would likely lower rates and pick up spending in coming months to shore up growth.
Ting called the slowdown “worse than expected” in the research note.
The deleveraging drive pushed by Beijing policymakers has had an impact, analysts say, pointing to flagging investment.
Foreign direct investment (FDI) into China increased 1.3 percent to 345.59 billion yuan ($54.06 billion) in the first five months of 2018, China’s Ministry of Commerce said on Thursday.
In May, FDI into China rose 7.6 percent compared with a year earlier at 58.81 billion yuan, according to the ministry.