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China April data underscores economy still losing steam

Source : REUTERS
Last Updated: Tue, May 13, 2014 09:18 hrs
​China Factory

Chinese investment, retail sales and factory output growth all disappointed in April by hitting multiyear lows, suggesting the world's second-largest economy is still losing steam despite government efforts to shore up activity.

Factory output rose 8.7 percent in April from a year earlier, marking the slowest growth in five years, the National Bureau of Statistics said on Tuesday. The result missed economists' expectations of an 8.9 percent rise.

The lacklustre performance led some analysts to question whether the government may step up efforts to bolster economic growth lest it fall short of the official target of around 7.5 percent.

"Whether the government will take enough measures to lessen the downturn, this is the biggest question for now," said Wei Yao, an economist at Societe Generale in Hong Kong.

"The most concerning number is the fixed-asset investment number," she said. "The number basically tells us the housing downturn has more than offset the investment push from the government so far."

Fixed-asset investment, a key driver of growth, grew 17.3 percent in the first four months of the year compared with the same period last year. That was weaker than expected and the worst showing since December 2001.

Retail sales also missed forecasts by rising 11.9 percent in April from a year earlier, the weakest growth in more than five years.

To shore up economic growth, Beijing has been loosening policy at the margins by lowering taxes, quickening infrastructure investment, and reducing the amount of cash that the smallest banks have to keep at the central bank to encourage freer lending.

But a slowing property market, where revenues for developers are falling even as home prices continue to rise, has heightened the pain of the cooling economy.

Data on Tuesday showed revenues from property sales fell 7.8 percent in the first four of months of the year compared with the same period last year.

Real estate directly affects about 40 other industries in China and is considered a crucial pillar of the economy.

In a sign that China's housing downturn is starting to disconcert authorities, sources told Reuters on Tuesday that the central bank has asked commercial banks to quicken their disbursements of mortgages.

Economists polled by Reuters had forecast retail sales to rise 12.2 percent. Fixed-asset investment for the January-April period was seen up 17.7 percent.


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