China reported better-than-expected figures on industrial production and retail sales

September 17, 2018 8:14 pmComments Off on China reported better-than-expected figures on industrial production and retail salesViews: 6

China reported better-than-expected figures for industrial production and retail, although a key investment figure reached a new record low. It sheds light on the challenges faced by the Beijing authorities in their attempts to support the economy by fighting US duties.

The new data confirm the consensus conclusions that the world’s second-largest economy is cooling down but is not yet under threat.

The industrial production grew by 6.1% in August on an annual basis, according to data from the National Bureau of Statistics, which is slightly above the analysts’ expectations and is slightly weaker than in July.

The data show that this is the first increase in the last three months. However, the production of key goods for the economy, such as vehicles and equipment, is shrinking. The car production is growing steadily, and the so-called raw steel increases by just one-third of the pace observed in the previous month.

The retail sales also rose by 9% yoy. The analysts expected growth of 8.8%, unchanged in July.

By contrast, the growth in fixed assets investment slowed down to 5.3% between January and August, compared to the same period an year earlier, driven by slowing infrastructure growth. The investment in fixed assets in the private sector increased by 8.7% in the January-August period, compared with an increase of 8.8% in the first seven months of the year. They account for around 60% of all Chinese investment.

The increase in infrastructure spending is slowing again to 4.2% in the first eight months of the year, compared with an increase of 5.7% in January-July.

China has started the year hard but its economic outlook has been diminished by the escalating trade conflict with the United States and the cooling of domestic demand, triggered in part by the tightening of risk-adjusted regulations.

At the same time, Beijing is trying to speed up infrastructure investment, but analysts say it will take time before its benefits are felt, and economic conditions are expected to slow down before they improve.

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