China’s economy is showing fresh signs of losing momentum, with industrial production and consumer spending weakening in July, adding to concerns that the slowdown in the world’s second-largest economy could be extending, The Guardian reported.
Industrial output rose 4.5 per cent year-on-year in July, slowing from 5.3 per cent in June, according to data released by China’s National Bureau of Statistics. The figure was also below market expectations of around 4.8 per cent.
Retail sales, a key indicator of domestic consumption, increased by just 0.6 per cent from a year earlier, compared with 1 per cent growth in June. The latest figures have reinforced concerns over persistently weak consumer demand despite Beijing’s efforts to support economic activity.
The weakness follows a significant slowdown in the second quarter, when China’s economy expanded 4.3 per cent year-on-year, down from 5 per cent in the first quarter and marking its weakest quarterly growth in more than three years.
Investment data also pointed to mounting pressure. Fixed-asset investment declined 6.7 per cent in the first seven months of the year, worsening from the 5.7 per cent contraction recorded during the January-June period.
China continues to grapple with sluggish household consumption and a prolonged property downturn. New home prices fell 0.1 per cent month-on-month in July and were 3.2 per cent lower than a year earlier, indicating that weakness in the real-estate sector remains a drag on broader economic activity.
Manufacturing indicators have also weakened. China’s official manufacturing purchasing managers’ index fell to 49.2 in July from 50.3 in June, slipping below the 50-point level that separates expansion from contraction. New orders also declined sharply, pointing to softer demand for Chinese manufacturers.
While exports and high-technology manufacturing have provided some support to the economy, the latest figures have increased pressure on policymakers to strengthen domestic demand and investment.
Chinese Premier Li Qiang has called for measures to stabilise external demand, expand international trade cooperation and make greater use of policy tools to support economic growth. Beijing has reiterated its commitment to meeting its annual economic objectives, although economists are watching for signs of stronger stimulus as domestic demand remains subdued.
