China's industrial production growth reached its lowest level in 17 years, but investment accelerated

BEIJING (Reuters) – China's industrial production growth hit 17-year low

in the first two months of the year, indicating further weakness in the world's second-largest economy.

However, investments accelerated as the government accelerated the construction of more road and rail projects, providing some relief to policymakers who were striving to avoid further downturn, data revealed. published on Thursday.

China is strengthening its support for the economy this year, as growth is expected to reach the lowest levels in 29 years. Prime Minister Li Keqiang announced last week tax cuts and additional infrastructure spending of several hundred billion dollars, even as officials had vowed not to resort to mbadive stimulus measures as per the past.

Industrial production rose 5.3% in January-February, according to the National Bureau of Statistics (BBS), less than expected and the slowest pace since early 2002. Growth in industrial production is expected to slow to 5, 5%, compared to 5.7% in December.

An official factory survey showed that manufacturing output fell in February for the first time since January 2009, while factory output inflation in February was at its lowest level ever, suggesting additional benefit on industrial profits.

Chinese manufacturers face weaker sales at home and abroad, as their exports are affected by US tariffs on Chinese products and the cooling of global demand. China's exports to all major markets fell generally last month.

China combines the January and February business data to try to alleviate the distortions created by the long Lunar New Year holidays each year, but some badysts believe that a clearer picture of the Health of the economy might not appear before the release of the first quarter data in April.

Capital investment growth accelerated to 6.1% in the first two months of this year.

Analysts polled by Reuters forecast an increase of 6.0%, slightly 5.9% in 2018.

Capital investment by the private sector increased by 7.5% over the same period, after increasing by 8.7% in 2018. Private investment accounts for about 60% of total investment in China.

Growth in infrastructure spending, a strong economic driver in previous years, was 4.3 percent year-over-year, compared to 3.8 percent last year.

China is trying to create a construction boom to revive demand and revive the economy, while strengthening support measures to keep small, cashless businesses afloat, ranging from tax cuts to financial incentives for companies that do not reduce their workforce.

Retail sales were slightly better than expected, with the overall figure increasing 8.2% in January-February compared with the previous year, in line with December.

Earlier this week, industry data showed that auto sales in China fell for the eighth consecutive month in February, reinforcing concerns over the loss of consumer confidence.

The Chinese state planner announced in January measures to increase consumption of goods ranging from eco-friendly devices to expensive products such as cars, but the scale and scope of the subsidy program are still unclear.

However, sales of appliances and furniture slowed significantly at the beginning of the year, likely due to a 3.6% drop in home sales.

(Report by Lusha Zhang, Stella Qiu and the Beijing Monitoring Bureau, edited by Kim Coghill)