BEIJING, Sept 15 (Reuters) – China’s industrial output picked up pace in August though sluggish consumption and a worsening investment slump reinforced concerns over deepening economic imbalances.
Tuesday’s data highlighted a familiar fault line in the world’s second-largest economy, where resilient manufacturing and exports are sustaining growth even as weak household spending and faltering investment weigh on domestic demand. The divergence is likely to intensify pressure on Beijing to roll out more support measures as policymakers seek a more balanced recovery.
Industrial output grew 5.2% from a year earlier in August, quickening from a 4.5% increase in July and beating expectations for a 4.8% rise, figures released by the National Bureau of Statistics showed.
Retail sales, a gauge of consumer activity, rose 0.4%, slowing from a 0.6% gain in July and below an expected 0.8% rise.
“We have lowered our 2027 growth forecast to 4.3%, reflecting a more prolonged property downturn which is likely to keep growth subdued despite stronger public investment,” said Sheana Yue, senior economist at Oxford Economics.
The government is targeting growth of between 4.5% and 5% this year.
China’s economy entered the second half of the year on a weak footing, with factory output, consumption and investment all struggling to gain momentum.
The latest data highlighted the scale of the challenge facing policymakers as businesses remain reluctant to commit new capital.
Fixed-asset investment, which includes infrastructure and property investment, declined 7.2% in the first eight months, marking the steepest drop since April 2020.
Property investment dived 19.9% in the first eight months from the same period last year, although investment in high-tech industries expanded 5.2% in keeping with the global AI boom.
While factory activity improved last month, it remained in contraction and services activity stayed sluggish. Weak domestic demand also weighed on credit growth, as new bank loans returned to positive territory but fell well short of analysts’ forecasts after a record contraction in July.
The nationwide urban surveyed unemployment rate came in at 5.3% for August, edging up from 5.2% the previous month.
Extreme weather likely remained a drag on activity. Four typhoons made landfall in China during August, disrupting operations in the east-coast manufacturing and logistics belt.
Beijing has responded with faster government bond issuance and expanded loan interest subsidies for small private firms and consumers, while the central bank has pledged additional policy support without signalling explicit cuts to policy rates or banks’ reserve-requirement ratio.
“The market is waiting for the fiscal policy to become more supportive in the third quarter after the economy slowed in the second quarter,” said Zhiwei Zhang, president and chief economist of Pinpoint Asset Management.
(Reporting by Kevin Yao, Yukun Zhang and Ethan Wang; Editing by Shri Navaratnam)
Comments