Pressure builds on Chinese economy
China's growth looks set to cool further in coming months, with a barrage of August economic data doing little to dispel views that domestic demand is softening and government support measures will take some time to kick in.
While industrial output and retail sales readings on Friday were better than expected, most other indicators over the past week were more downbeat, with a key investment gauge falling to a fresh low and broad credit growth the slowest on record.
Two other bulwarks of the economy are also starting to look a bit shaky, with exports expected to succumb to the cumulative weight of US tariffs and the property sector losing a step from July.
"We believe China's overall economy continues to slow, and this could worsen in coming months," economists at Nomura said in a note.
Nomura and other China watchers expect more growth-boosting measures from Beijing in coming months to cushion the economy and weather the US trade war, but some warn high debt levels may give policymakers less room for stimulus than in the past.
On the surface, two bright spots in the August data were industrial output and retail sales, which picked up more than forecast.
Most economists, however, believe the gains are unlikely to be sustained, with business conditions in the world's second-largest economy expected to get worse before they get better.
Industrial output rose 6.1 per cent from a year earlier, the National Bureau of Statistics (NBS) said, a tick better than July.
Retail sales rose nine per cent, driven by jewellery and home appliances. Analysts had expected 8.8 per cent, unchanged from July and not far from a 15-year low.
A closer examination of both data series, however, pointed to signs of underlying weakness.
Industrial exports looked solid, but analysts believe companies have been rushing out products, or "frontloading", to beat US tariffs, raising the risk of a slump later in the year.
Production of key goods such as motor vehicles and transport equipment continued to decline. Output of cars barely grew, while steel mills, aluminium smelters and oil refiners all throttled back output from recent high levels.
Growth in hi-tech products like semiconductors and industrial robots also slowed sharply.
Auto sales, which account for a tenth of retail sales, fell 3.2 per cent on-year as Chinese consumers turned more cautious.
Investment still sluggish
Investment data - a key indicator of future activity - also pointed to a further loss of economic momentum.
Fixed-asset investment growth slowed to 5.3 per cent in January-August, weighed down again by slowing infrastructure growth. Analysts polled by Reuters had expected 5.5 per cent, the same as the previous all-time low hit last month.
For August, fixed-asset investment rose 4.6 per cent, Reuters calculations showed.
Growth in infrastructure spending, a powerful economic driver last year, also slowed to 4.2 per cent in the first eight months of the year, from 5.7 per cent in January-July. - Reuters