Thu, May 16, 2019 - Page 10 News List

China’s struggling retail sales point to weakness

BALANCING ACT:While retail growth was at its worst since 2003, the crucial unemployment rate fell to 5 percent last month from 5.2 percent in March


Chinese employees work on rebars at a factory in Hangzho, China, yesterday. Growth in output at China’s factories and workshops last month slowed sharply to 5.4 percent year-on-year, down from 8.5 percent in March.

Photo: AFP

China’s economy showed further signs of weakness last month as the slowest growth in retail sales for 16 years highlighted the task leaders have in ramping up domestic demand at the same time as fighting a painful trade dispute with the US.

Authorities have for years been attempting to transition the world’s No. 2 economy from being reliant on state investment and exports to a more stable one driven by China’s huge army of consumers, with the tariffs standoff reinforcing the need for such a change.

However, there were signs that those consumers were starting to pull back, with clothes and auto sales falling last month from the same period last year.

Total retail sales expanded 7.2 percent year-on-year last month, figures released yesterday showed. That was well off the 8.4 percent tipped by economists in a Bloomberg News survey and a big drop from March.

The Chinese National Bureau of Statistics data represent the worst pace since 2003, at the height of the SARS crisis.

Growth in output at China’s factories and workshops last month slowed sharply to 5.4 percent year-on-year, down from 8.5 percent in March, and below forecasts.

Fixed-asset investment during January to April rose 6.1 percent, from 6.3 percent in the first three months, with private-sector investment growth slowing to 5.5 percent expansion and infrastructure investment steady from last month.

The readings fanned speculation that authorities could unveil another round of pump-priming — having wound back on such stimulus in recent weeks following signs of a bounce in the economy — with Shanghai’s composite index yesterday jumping almost 2 percent.

The government lowered its growth target for the year to 6 to 6.5 percent, while growth in the first quarter stabilized at 6.4 percent after decelerating every quarter last year.

“It’s quite safe to say that the double dip is confirmed and growth has yet to truly bottom out,” said Nomura Holdings Inc economist Lu Ting (陸挺), forecasting continued headwinds for China’s exports, property markets in smaller cities and sales of passenger vehicles, mobile phones and construction machinery.

However, while growth remains relatively slow, the crucial unemployment rate remains low and fell to 5 percent last month from 5.2 percent in March.

While policymakers want to prevent the economy from taking a bad hit, analysts say their room to maneuver is smaller than in previous tough spots.

“With the scale of stimulus likely to remain smaller than in previous downturns, we don’t anticipate a strong recovery,” Julian Evans-Pritchard of Capital Economics Ltd said.

On a brighter note, Australia and New Zealand Banking Group Ltd economist Betty Wang (王蕊) said property investment had picked up over the first four months of the year thanks to “a big jump in developers’ funding conditions,” with bank loans, down payments and mortgages all growing at a quicker pace.

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