China Growth Gears Grind Lower

By Glenn Dyer | More Articles by Glenn Dyer

China’s April trade data showed an economy softer than in March – exports were weaker than expected, imports a bit better, but yesterday we got more confirmation that China’s economic activity weakened last month (before the escalation in the US trade war at the start of last week) as growth in factory production, investment and retail sales all slowed.

The weak data has raised the prospect of another easing in policy by the central bank – a cut in the reserve asset ratio of banks which would see more money lent to business. There have already been five cuts in the past 17 months.

The last cut was at the start of January – a 1% drop.

Industrial output in China was up 5.4% in April from a year earlier, slowing sharply from an 8.5% year-over-year increase in March, the National Bureau of Statistics said Wednesday.

April’s growth also missed the median forecast of 6.6% from market economists. But the output of crude steel hit an all-time high last month (See separate story).

Fixed-asset investment in non-rural areas rose 6.1% in the January-to-April period from a year ago, down from the 6.3% growth in the first three months, and also missing economists’ median forecast of 6.4%

Retail sales climbed 7.2% in April from a year earlier, a sharply slower rate compared with slowing March’s 8.7% growth and also missing economists’ median forecast for growth of 8.8%.

That was a 16 year low for retail sales growth.

Production of motor vehicles slumped nearly 19% in April, the steepest monthly decline ever.

Earlier this week, industry data showed automobile sales in China fell 14.6% in April, the 10th consecutive month of decline.

Economists say that taken over the month, the Chinese economy sagged noticeably in April after the growth spurt in March.

Growth in infrastructure spending held steady at 4.4% on-year in January-April, private sector fixed-asset investment slowed sharply to 5.5% growth in the same period from 6.4%.

But property investment remained comparatively buoyant in April – real estate investment rose 11.9% in April from a year earlier, unchanged from March and well ahead of 2018’s growth.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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