Chinese economy still losing steam
CHINESE investment, retail sales and factory output growth all disappointed last month by hitting multi-year lows, suggesting the world's second-largest economy is still losing steam despite Beijing's efforts to shore up activity.
Factory output rose 8.7 per cent last month from a year earlier, marking the slowest growth in five years, the National Bureau of Statistics said yesterday. This missed economists' expectations of an 8.9 per cent rise.
The lacklustre performance led some analysts to question whether the government may step up efforts to bolster economic growth lest it fall short of the official target of around 7.5 per cent.
"The most concerning number is the fixed-asset investment number," said Wei Yao, an economist at Societe Generale in Hong Kong. "The number basically tells us the housing downturn has more than offset the investment push from the government so far."
Fixed-asset investment, a key driver of growth, grew 17.3 per cent in the first four months of the year, compared with the same period last year. That was weaker than expected and the worst since December 2001.
Retail sales also missed forecasts by rising 11.9 per cent last month from a year earlier, the weakest growth in more than five years.
To shore up economic growth, Beijing has been loosening policy at the margins by lowering taxes, quickening infrastructure investment, and reducing the amount of cash that the smallest banks have to keep at the central bank to encourage freer lending.
But a slowing property market, where revenues for developers are falling even as home prices continue to rise, has heightened the pain of the cooling economy.
Real estate directly affects about 40 other industries in China and is considered a crucial pillar of the economy.