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CHINA-ECONOMY-INDUSTRY
Chinese growth shows signs of flagging as leaders tackle problems
BEIJING, June 14, 2018 (BSS/AFP) – Chinese economic growth showed signs of
flagging in data released on Thursday as Beijing faces trade tensions with
the United States as well as debt and pollution battles at home.
Industrial output and retail sales in the world’s number two economy
slowed last month, while the central bank shied away from raising borrowing
costs despite another hike by the US Federal Reserve.
“External instabilities and uncertainties are increasing,” said National
Bureau of Statistics spokesman Mao Shengyong.
His comments come as weeks of negotiations between Beijing and Washington
show no signs of a breakthrough, with Donald Trump due Friday to decide on
whether to impose tariffs in billions of dollars worth of Chinese imports.
The US president stoked trade war fears by suggesting he will impose the
measures, saying “China could be a little bit upset” in an interview on Fox
News.
China has pledged any tariffs will void progress made in the recent talks
and has drawn up its own list of US targets.
“The trade friction does not solve any problem, it only makes the problem
more complicated,” the NBS’s Mao said.
On Thursday the NBS said output at factories and workshops expanded 6.8
percent year-on-year, from 7.0 percent in April and short of estimates in a
Bloomberg News survey.
The retail sector also slumped, providing some concern for leaders who are
looking for consumers to drive economic growth and move away from the export
and state investment-driven model.
Sales growth slowed to 8.5 percent from 9.4 percent in April. It was also
well short of the 9.6 percent forecast by analysts and maintained a downtrend
seen over the past 12 months.
The People’s Bank of China decision not to lift the amount it charges to
lend to banks indicated officials may be changing policy to combat slowing
growth, analysts say.
The Fed hiked rates and lined up another two this year as the US economy
picks up. Previous moves by the US central bank has prompted a similar move
by Beijing.
“China’s new leadership was greeted by a much more challenging environment
in 2018,” said Ting Lu, Chief China Economist at Nomura investment bank,
adding Beijing would likely lower rates and pick up spending in coming months
to shore up growth.
Ting called the slowdown “worse than expected” in the research note.
The deleveraging drive pushed by Beijing policymakers has had an impact,
analysts say, pointing to flagging investment.
Expansion in fixed-asset investment sagged to 6.1 percent for the first
five months — from seven percent in January-April — and marking the slowest
pace since 1999 when data collection began, according to Bloomberg News.
Even as the economic indicators fell, the statistics bureau spokesman said
China’s economy was on the right track for continued growth in the second
half of the year.
“I’m fully confident China can achieve about 6.5 percent growth for the
whole year,” Mao said.
BSS/AFP/HR/1215