China’s economy is showing signs of cooling further as the US prepares even tougher trade tariffs, with investment slowing to a record low and consumers turning more cautious about spending, data released yesterday showed.
Fixed-asset investment growth slowed more than expected to 5.5 percent from January to last month, a result of Beijing’s crackdown on lavish local government borrowing for projects to boost growth.
Industrial output growth also undershot expectations, weighed down by pollution curbs and an uncertain trade outlook. While exports have been fairly resilient so far, business surveys have pointed to weakening overseas orders.
Fixed-asset investment last month grew 3 percent from a year earlier.
Retail sales figures also missed expectations, with Chinese consumers more reluctant to spend on everything from cosmetics and other everyday goods to big-ticket items such as home appliances and furniture.
Sales last month rose 8.8 percent from a year earlier, less than an expected 9.1 percent and down from 9 percent in June, despite a broad import tax cut that went into effect last month.
It was not clear if consumer reluctance was due to softening local conditions or worries about the trade war with the US.
Industrial output also failed to pick up as expected. It last month rose 6 percent, missing analysts’ estimates for 6.3 percent growth and unchanged from June.
While trade and inflation have shown limited impact from the trade row so far, it is early days and there are concerns that a protracted battle could produce a sharper Chinese slowdown than expected just a few months ago.
China and the US have slapped tariffs on each other’s goods and more are due to go into effect next week, with few signs that either side is in the mood to compromise.
In one of the few encouraging spots in the data, private-sector fixed-asset investment rose 8.8 percent in the first seven months of this year, picking up from 8.4 percent in the first half.
It accounted for about 60 percent of overall investment in China.
However, growth in infrastructure spending, a powerful economic driver, slowed from 7.3 percent to 5.7 percent in the first seven months of the year.
Still, there were early signs that Beijing’s shift to supporting growth might already be offering some cushion.
Real-estate investment last month jumped 13.2 percent year-on-year, the fastest in nearly two years and higher than June’s 8.4 percent rise, Reuters calculations showed.
New construction starts jumped 32.4 percent year-on-year, likely buoyed by stronger home sales, improved funding conditions for cash-strapped developers and the government’s heavy spending on public housing.
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