China yesterday delivered a mixed economic report card for last month as softening retail sales pointed to a consumption slowdown, even as a pickup in industrial output and investment suggested support measures might be starting to take hold.
Taken together with weak credit data the previous day, the latest readings reinforced consensus views that the world’s second-largest economy would continue to cool in the next few quarters.
Facing the weakest economic growth since the global financial crisis, Chinese policymakers have been fast-tracking big road and rail projects, pushing banks to increase lending and cutting taxes to ease strains on businesses.
Manufacturing has been supported by resilient exports as firms rush to ship goods to the US ahead of higher tariff rates, amid persistent trade tensions between the world’s largest economies.
However, the bigger worry for China lies at home, with domestic consumption starting to slow amid mounting household debt, while the real-estate sector — a major driver — continues to cool.
Retail sales last month rose 8.6 percent from a year earlier, the Chinese National Bureau of Statistics said, the slowest since May.
Analysts had expected only a marginal dip from 9.2 percent in September.
A slump in auto sales has put the world’s biggest car market on the verge of its first annual contraction since at least 1990, while garment sales are growing at the weakest pace in more than two years, pointing to faltering consumer confidence.
“There are myriad reasons for this step-down in consumer spending: The increase in mortgage debt is eating into disposable income, investment returns are falling and the closure of many online lenders is cutting off a key source of consumer finance,” Everbright Sun Hung Kai Co (大新鴻基) said in a note.
Beijing is hoping to offset the drag by cutting import tariffs and income tax — it is even reportedly considering making mortgage payments tax-exempt — but those policies might not have much impact, Everbright said.
E-commerce giant Alibaba Group Holding Ltd (阿里巴巴) reported a record 213.5 billion yuan (US$30.71 billion) in sales on Sunday for Singles’ Day — an annual 24-hour buying frenzy.
However, the pace of growth dropped to its slowest rate in the event’s 10-year history.
Slower retail sales were due to seasonal factors, bureau spokeswoman Liu Aihua (劉愛華) told reporters.
However, analysts said sales growth has been on a downward trajectory since March.
“Almost all categories in retail sales disappointed in October. We think the government’s fiscal stimulus came in too late, and people now tend to save more and spend less,” said Iris Pang (彭藹嬈), a greater China economist at ING Groep NV in Hong Kong.
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