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China industrial output, retail sales lose steam in April
[BEIJING] China’s economy lost steam in April after a rebound in March, even before US President Donald Trump’s latest tariff increase arrived to further darken the outlook.
Growth in China's industrial output slowed more than expected to 5.4 per cent in April from a four-and-a-half-year high in March, reinforcing views Beijing will have to roll out more stimulus measures as a trade war with the United States intensifies.
Analysts polled by Reuters had forecast industrial output would grow 6.5 per cent, slowing from an unexpectedly strong 8.5 per cent in March.
Fixed-asset investment rose 6.1 per cent in January-April from the same period last year, also lagging expectations, the National Bureau of Statistics said on Wednesday.
Analysts had predicted a 6.4 per cent increase, picking up slightly from 6.3 per cent in January-March.
Private-sector fixed-asset investment, which accounts for about 60 per cent of overall investment in China, rose 5.5 per cent in the same period, compared with a increase of 6.4 per cent in the first three months of the year.
Meanwhile, retail sales expanded 7.2 per cent in April on-year, the slowest pace since May 2003, sharply down from March's 8.7 per cent and missing a forecast rise of 8.6 per cent.
Despite months of targeted stimulus measures, China's faltering pace in April demonstrates that the recovery was fragile and is now threatened further by the sharpening of the trade war.
Instead of paring back stimulus as the April Politburo meeting suggested, policy makers may again step on the gas as the nation’s 2020 growth goal is threatened.
"It’s possible President Xi doesn’t realize that the Chinese recovery is not yet assured," Freya Beamish, chief Asia economist at Pantheon Macroeconomics, wrote in a recent note. "China’s hand is worse than its fighting talk suggests."
The United States escalated a tariff war with China on Friday by hiking levies on US$200 billion worth of Chinese goods in the midst of last-ditch talks to rescue a trade deal. China retaliated on Monday, though on a smaller scale.
The US move comes as China's economy was beginning to show tentative signs of improvement after a flurry of support measures, though analysts had cautioned it was too early to call a recovery.
Economists at Citi estimate the US tariff increase could lop 50 basis points off China's GDP growth, reduce exports by 2.7 per cent and cost the country another 2.1 million jobs, though they are optimistic a trade deal will be reached eventually.