Image for article titled China’s new retail and industrial data beat expectations — but signs still point to trouble ahead

Photograph: Florence Lo (Reuters)

Official economic data out of China for the January and February interval got here in higher than anticipated. Industrial output rose 7%, increased than the 5% forecast by economists in a Reuters ballot, and sped up from the 6.8% development in December, in keeping with information revealed Monday by the Nationwide Bureau of Statistics.

In the meantime, retail gross sales grew 5.5%, higher than the 5.2% predicted by analysts however slowed from the earlier interval’s 7.4%.

Nonetheless, the nation’s troubled actual property sector continues to weigh on the economic system: Funding in property growth fell 9%. Business actual property gross sales are additionally down double-digit percentages.

“The nationwide economic system maintained the momentum of restoration and development and obtained off to a secure begin,” the statistics workplace mentioned in its launch. Beijing sometimes releases mixed information for January and February to easy over distortions attributable to the Lunar New Yr holidays.

China’s shaky home demand

Clouding the sturdy numbers from Monday’s information launch are the persistent indicators of weak home demand in China. New bank lending in China fell greater than anticipated in February, in keeping with Reuters calculations based mostly on Folks’s Financial institution of China information.

Whole outstanding yuan loans grew by 9.7% final month, a document low in information going again to 2003, in keeping with Bloomberg. The sluggish borrowing demand comes at the same time as the Chinese central bank made a surprise cut in the amount of money that banks should maintain in reserve, suggesting the stimulus measure has had little influence. And Beijing’s exhortations for unleashing “new high quality productiveness” (additionally translated as “new high quality productive forces”) stays more rhetorical than substantive, significantly absent deeper structural reforms to the nation’s economic system.

With shaky demand at house, China’s bid to hit a GDP growth target of 5% this yr will probably imply leaning heavily on its export machine. However that gambit will even face hurdles as governments, including the EU and Brazil, launch probes into China’s allegedly unfair commerce practices. Individually, the U.S. is contemplating whether to investigate Chinese shipbuilding following a petition from main American labor unions.


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