China’s economy showed further signs of weakness in April as the slowest growth in retail sales for 16 years highlighted the task leaders have in ramping up domestic demand at the same time as fighting a painful trade war with the US.
Authorities have for years been attempting to transition the world’s number two economy from being reliant on state investment and exports to a more stable one driven by China’s huge army of consumers, with the tariffs stand-off reinforcing the need for such a change, agency reports.
But those consumers show signs of starting to pull back with clothes and car sales falling in April from the same period last year. The latest figures on Wednesday show total retail sales expanded 7.2 percent on-year last month, well off the 8.4 percent tipped by economists in a Bloomberg News survey and a big drop from March.
The National Bureau of Statistics data represent the worst pace since 2003, at the height of the SARS crisis.
Growth in output at China’s factories and workshops in April slowed sharply to 5.4 percent on-year, down from 8.5 percent in March, and below forecasts.
Fixed-asset investment during the January-April period rose 6.1 percent, from 6.3 percent in the first three months, with private-sector investment growth slowing to 5.5 percent expansion in infrastructure investment steady from last month.
The readings fanned speculation authorities will unveil another round of pump-priming — having wound back on such stimulus in recent weeks following signs of a bounce in the economy — with Shanghai’s composite index jumping almost two percent Wednesday.
Beijing has rolled out huge tax cuts and other measures this year to ramp up the economy and offset the impact of a trade war that has seen the US impose tariffs on hundreds of billions of dollars worth of Chinese goods,
causing worries for exporters The government lowered its growth target for the year to 6.0-6.5 percent,
while growth in the first quarter stabilised at 6.4 percent after decelerating every quarter last year.
“It’s quite safe to say that the double dip is confirmed and growth has yet to truly bottom out,” said Lu Ting of Nomura bank, forecasting continued headwinds for China’s exports, property markets in smaller cities and sales
of passenger cars, mobile phones and construction machinery. However, while growth remains relatively slow, the crucial unemployment rate remains low and fell to 5.0 percent in April from 5.2 percent in March.
While policymakers want to prevent the economy from taking a bad hit, analysts say their room to manoeuvre is smaller than in previous tough spots. “With the scale of stimulus likely to remain smaller than in previous
downturns, we don’t anticipate a strong recovery,” said Julian Evans- Pritchard of Capital Economics.
On a brighter note, Betty Wang, an economist at ANZ bank, said in a research note that property investment had picked up over the first four months of the year thanks to “a big jump in developers’ funding conditions”, with bank loans, down payments and mortgages all growing at a quicker pace.