China’s economy slowed across the board last month with factory activity and retail sales disappointing, suggesting the world’s No. 2 economy is losing traction in the third quarter.
Production at Chinese factories and mines rose at the slowest rate since November and expanded 5.7 percent last month from a year earlier, according to data released by the Chinese National Bureau of Statistics (NBS) yesterday, compared with June’s gain of 6.8 percent. The median forecast of economists in a Bloomberg survey was for an increase of 6 percent.
Retail sales grew 3.7 percent year-on-year last month, the slowest this year, down from 4.8 percent in the previous month. Expansion in fixed-asset investment in the first seven months of the year decelerated to 1.6 percent, as a contraction in the real estate sector deepened. The urban unemployment rate rose more than expected to 5.2 percent.
Photo: EPA
“China’s economy overcame negative factors including a complex and fast-changing external environment and extreme weather at home, and maintained progress amid stability,” the NBS said in a statement. “The economy showed relatively strong resilience and vibrancy.”
The offshore yuan held steady after the data release and the yield on China’s 10-year government bonds edged slightly lower.
The latest snapshot of the economy indicated China’s growth lost steam after a show of resilience earlier in the year allowed Beijing to take a wait-and-see approach to further stimulus.
Top leaders have signaled they would stick with supportive measures already planned while promising to pump more aid when needed, a strategy analysts expect to be fine-tuned pending economic figures in the coming months.
Although uncertainty abounds over the outlook for global trade, industrial activity and construction also suffered from extreme weather. The disruptions last month, caused by high temperatures, unusually heavy rain and flooding in large swathes of China, added to what is traditionally a slow season for the economy.
Growth in yuan-denominated new loans contracted for the first time in 20 years in the month, highlighting subdued willingness for borrowing and spending.
China’s exports remained a bright spot this year, despite a drop in shipments to the US after US President Donald Trump raised tariffs.
Instead of announcing massive new measures to juice growth, Beijing has in recent weeks ramped up efforts to curb cutthroat competition among businesses. The campaign has attracted intense attention from investors given the stakes involved in reflating the economy and the potential impact on corporate profitability in industries from steel to solar energy and electric cars.
Authorities are also looking for ways to boost domestic consumption to reduce reliance on foreign demand in the long run amid rising rivalry with the US.
The government this week unveiled a plan to subsidize part of the interest payments on some consumer loans, after announcing earlier it would gradually waive preschool fees to ease education costs and offer childcare subsidies for families across the nation.
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