China’s retail sales and industrial output grew strongly last month as the government spent heavily on a stimulus to boost growth in the world’s third-biggest economy as exports plunged.
Retail sales rose 15.2 percent compared with May last year, up from April’s 14.8 percent growth rate, the Chinese National Bureau of Statistics reported yesterday. Industrial output rose 8.9 percent, rebounding from April’s lackluster 7.3 percent and exceeding March’s 8.3 percent rate.
Beijing is trying to shield China from the global slump by boosting domestic consumption with a 4 trillion yuan (US$586 billion) plan to inject money into the economy through spending on building highways and other public works.
PHOTO: EPA
Yesterday’s data highlighted the economy’s heavy reliance on government spending to maintain growth and the gap between stimulus-financed industries and struggling fields with exposure to plunging exports.
Output of stone and other minerals used in stimulus-financed construction rose 14.7 percent last month, while auto production jumped 29 percent, boosted by sales tax cuts and other government incentives for buyers. Among industries exposed to exports, output of computers and telecommunications equipment grew by just 4.3 percent.
Analysts also point to healthy retail sales as another possible source of growth, though consumer spending is still a relatively small portion of China’s economy.
The government has set a growth target of 8 percent this year, though the economy expanded by only 6.1 percent in the first quarter — its slowest rate since the 1990s, but the strongest for any major economy this year. The World Bank says it expects 6.5 percent growth for this year and private sector economists say the economy is improving.
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