China unveileda raft of data that showed slower industrial and retail activity in the first
two months of the year, the latest evidence to suggest the world's second-largest
economy is losing steam.
"This is terrible," said Liu Li-Gang, a Hong Kong-based economist at ANZ Bank." I
wasn't expecting high figures, but this is worse than I thought."
Industrial output rose 8.6 per cent year-over-year in the January-February period, down
from a 9.7 per cent increase in December, data from the National Bureau of Statistics
showed Thursday. The rise in the two months--combined to adjust fordistortions from
the Chinese Lunar New Year holiday -- is the slowest since 2009.
Growthin fixed-asset investment also eased to 17.9 per cent year-over-year, the
weakest pace since 2002, down from 19.6 per cent last year as a whole.
While activity continues to expand, the pace of growth is poor by Chinese standards.
It now seems unlikely that economic growth in the first quarter of this year will match
the 7.7 per cent year-over-year rate logged in 2013.
Shortly before the data were released, Chinese Premier ********* expressed
confidence that the nation would reach its economic targets for the year, brushing aside
doubts from some foreign economists.
"Currently we see more difficulties (than last year)...but the Chinese economy has great
potential and resilience," Mr Li said, adding that he was confident Beijing could keep
growth in a reasonable range.
Beijing has set an economic growth target of about 7.5 per cent this year, unchanged
from the 2013 target, though down from the actual growth recorded last year.
Despite the fact that data were combined for the two months, analysts say the
economic figures so far this year may still include distortions from the period when
many factories close down and migrant workers return to distant villages for the new
year celebration.
"Usually the March data would be slightly better than the first two months," said
Ma Xiaoping, an economist at HSBC in Beijing.
The median forecast of 13 economists surveyed by The Wall Street Journal was for
industrial production to grow by 9.5 per cent, much faster than the actual growth seen.
Market sturned southward after the unexpectedly weak figures, but the reaction was
muted as traders weighed the possible holiday effect. Hong Kong's benchmark
Hang Seng Index was down 0.4 per cent within minutes of the release, and the
Australian dollar fell less than 0.2 per cent.
Other indicators, released together on Thursday, pointed to weakness elsewhere in the
economy. Retail sales rose 11.8 per cent year-over-year in the January-February
period, down from 13.6 per cent year-over-year growth in December. Construction
starts, a key driver of growth in recent years, fell by 27 per cent in area terms.
Nervousness about China, the world's biggest consumer of many raw materials, has
been a key factor behind sliding commodity prices this week, with iron ore down 6 per
cent and copper also tumbling.
two months of the year, the latest evidence to suggest the world's second-largest
economy is losing steam.
"This is terrible," said Liu Li-Gang, a Hong Kong-based economist at ANZ Bank." I
wasn't expecting high figures, but this is worse than I thought."
Industrial output rose 8.6 per cent year-over-year in the January-February period, down
from a 9.7 per cent increase in December, data from the National Bureau of Statistics
showed Thursday. The rise in the two months--combined to adjust fordistortions from
the Chinese Lunar New Year holiday -- is the slowest since 2009.
Growthin fixed-asset investment also eased to 17.9 per cent year-over-year, the
weakest pace since 2002, down from 19.6 per cent last year as a whole.
While activity continues to expand, the pace of growth is poor by Chinese standards.
It now seems unlikely that economic growth in the first quarter of this year will match
the 7.7 per cent year-over-year rate logged in 2013.
Shortly before the data were released, Chinese Premier ********* expressed
confidence that the nation would reach its economic targets for the year, brushing aside
doubts from some foreign economists.
"Currently we see more difficulties (than last year)...but the Chinese economy has great
potential and resilience," Mr Li said, adding that he was confident Beijing could keep
growth in a reasonable range.
Beijing has set an economic growth target of about 7.5 per cent this year, unchanged
from the 2013 target, though down from the actual growth recorded last year.
Despite the fact that data were combined for the two months, analysts say the
economic figures so far this year may still include distortions from the period when
many factories close down and migrant workers return to distant villages for the new
year celebration.
"Usually the March data would be slightly better than the first two months," said
Ma Xiaoping, an economist at HSBC in Beijing.
The median forecast of 13 economists surveyed by The Wall Street Journal was for
industrial production to grow by 9.5 per cent, much faster than the actual growth seen.
Market sturned southward after the unexpectedly weak figures, but the reaction was
muted as traders weighed the possible holiday effect. Hong Kong's benchmark
Hang Seng Index was down 0.4 per cent within minutes of the release, and the
Australian dollar fell less than 0.2 per cent.
Other indicators, released together on Thursday, pointed to weakness elsewhere in the
economy. Retail sales rose 11.8 per cent year-over-year in the January-February
period, down from 13.6 per cent year-over-year growth in December. Construction
starts, a key driver of growth in recent years, fell by 27 per cent in area terms.
Nervousness about China, the world's biggest consumer of many raw materials, has
been a key factor behind sliding commodity prices this week, with iron ore down 6 per
cent and copper also tumbling.
