Tue, Sep 17, 2019 - Page 10 News List

PRC’s slowdown deepened in August

PESSIMISM SHOWING:Industrial output growth fell to 4.4 percent, the slowest since February 2002, with the value of delivered industrial exports dropping 4.3 percent

Reuters, BEIJING

A customer buys fresh produce at a market in Beijing yesterday.

Photo: AFP

The slowdown in China’s economy deepened last month, with industrial production growing at its weakest pace in 17-and-a-half years amid rising US trade pressure and softening domestic demand.

Retail sales and investment gauges also worsened, data showed yesterday, reinforcing views that China is likely to cut some of its key interest rates this week for the first time in more than three years to prevent a sharper slump in activity.

Despite a slew of growth-boosting measures since last year, the world’s second-largest economy has yet to stabilize, and analysts say Beijing needs to roll out more stimulus to ward off a sharper slowdown.

Industrial output growth unexpectedly weakened to 4.4 percent from the same period a year earlier, the slowest pace since February 2002 and receding from 4.8 percent in July.

In particular, the value of delivered industrial exports fell 4.3 percent year-on-year, the first monthly decline since at least two years, Reuters records showed, highlighting the growing toll on Chinese manufacturers from the escalating Sino-US trade war.

Last month saw dramatic escalations in the bitter trade row, with US President Donald Trump announcing new tariffs on Chinese goods from Sept. 1, and China letting its yuan sharply weaken days later.

After Beijing hit back with retaliatory tariffs, Trump said existing levies would also be raised next month and in December.

“August usually is a month that exporters prepare orders for Christmas products, but the figure showed that the manufacturers are not very optimistic about the prospect of Sino-US trade negotiations, and cautious about building up inventories,” said Nie Wen (聶文), an economist at Hwabao Trust Co Ltd (華寶信託) in Shanghai.

Several analysts said in recent weeks that China’s economic growth was already testing the lower end of Beijing’s full-year target of around 6 to 6.5 percent, which is likely to spur more policy easing.

Second-quarter GDP growth cooled to 6.2 percent, the weakest in nearly 30 years.

Traders expect a cut in the central bank’s medium-term loan facility rate as early as today, which would open the way for a reduction in the new loan prime benchmark rate later in the week.

However, room for stimulus is believed to be limited by worries about rising debt risks, with policy easing by the People’s Bank of China expected to be more restrained than the US Federal Reserve or European Central Bank.

The gloomy activity data for last month added to signs of broad-based economic weakness, following soft trade and credit reports last week.

Retail sales missed expectations, with growth easing to 7.5 percent, from 7.6 percent in July.

Auto sales have slumped all year, prompting the National Bureau of Statistics of China to recently start reporting a new reading on consumption. Stripping out vehicles, retail sales rose 9.3 percent year-on-year.

Fixed-asset investment also disappointed. It rose 5.5 percent for the first eight months of the year from the same period last year, down from January to July’s 5.7 percent.

However, the real estate sector held up last month, with property investment growing at its fastest pace in four months as sales accelerated to its highest level in over a year.

Infrastructure investment — a key driver of growth — also picked up to 4.2 percent in the first eight months this year, from 3.8 percent in the January-July period.

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