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SHANGHAI – China's economic data on industrial output and investments released on Friday added evidence of a slowdown that some economists believe could jeopardize the government's 6% growth, without further stimulus.
May data included two key components of Chinese gross domestic product: value-added industrial production, up 5.0% over the previous year, and capital investment, up 5.6% during the first five months of the year. Both increases were slower than last month's reports from the National Bureau of Statistics. Beijing this year targeted GDP growth of between 6.0% and 6.5% – one of the lowest in the last 25 years.
Manufacturing output, the weakest since 1992, follows disappointing trade data released this week, showing that exports are almost stable and imports down 8.5% in May. The expansion of loans during the period has lagged every two months this year.
The lost impetus for the world's second-largest economy is a reflection of the perverse attitude resulting from the Trump government's tariffs on Chinese exports and its efforts to contain the country's technology sector. US trade pressure exacerbates the weakness of Beijing's efforts until recently to slow down economic activity to better control the debt.
"It seems that all of China's economic engines are losing momentum, from exports to home ownership," said Larry Hu, an economist at Macquarie Group in Hong Kong. "What is a thorny issue for policymakers is that their previous stimulus measures failed to curb investment in infrastructure, even as its crucial housing market cooled."
Home sales rose 8.9% in the first five months of 2019 compared to the same period last year, the government announced Friday, up from 10.6% in the first four months. Investment in commercial and residential real estate grew 11.2% in the first five months, compared with 11.9% in the January to April period. Housing starts rose 10.5% in the first five months, which is also slower than the four-month figure of 13.1%.
The consumer story was more encouraging in May as retail sales rebounded after reaching a 16-year low in April, reaching 8.6%. But analysts do not bet that Chinese consumers will stop the slowdown and expect the government to build more infrastructure.
This week again, Beijing made it easier for municipalities to use the proceeds of the bonds they issue to finance public works. After Friday's data release, the People's Bank of China announced a new effort to ease the credit crunch on private companies by giving small banks new access to liquidity.
Chinese leaders and state-run media dismissed concerns over the country's recent economic performance as a result of trade tensions in the United States. On Thursday, Deputy Prime Minister Liu He said the government has "many tools" to support the economy. At a conference held on Friday, the governor of China's central bank, Zhou Xiaochuan, said it was likely the authorities would lower the yuan if the trade fight with the United States continues, an initiative which could support exports by making them cheaper in other countries. countries.
"China will have to introduce more fiscal stimulus to achieve the 6% growth target this year," said Iris Pang, an economist at ING Bank NV. In March, the National People's Congress approved 2,000 billion yuan (288.95 USD). billion) including tax cuts that seemed to briefly improve business confidence.
After quarterly growth figures including a 6.4% increase in GDP in April suggesting that the economy held assets, several forecasters have raised their forecasts for China's economic performance in 2019, while remaining within the target range. by Beijing.
Among the initially confident companies, growth would be supported by economists from
Australian and New Zealand banking group
Ltd.
But Friday, ANZ lowered its forecast for 2019 from 6.4% to 6.2%, pointing out in a note that "economic data from China in the last two months have not met our expectations ". Betty Wang, an economist ANZ explained that there was less infrastructure construction than expected while the struggling auto industry had recently resulted in a decline in industrial production.
Beijing has orchestrated heavy debt-financed infrastructure spending to boost economic growth in the past, but the strategy may result in the government no longer being reiterated, said economist Lu Zhengwei at Industrial Bank in Shanghai.
"The second quarter will be the bottom of the year, so things will be better," said Mr. Lu. He added that growth for the second quarter should be around 6.3% and aim for growth. 6.4% in the last two quarters of this year.
-Liyan Qi and Grace Zhu in Beijing contributed to this article.
Write to James T. Areddy at [email protected]
Corrections & Amplifications
Liu He is deputy prime minister in China. An earlier version of this article incorrectly qualified him as prime minister. (June 14, 2019)
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