China growth target at risk as activity cools across the board
CHINA’S economy lost momentum in August as activity cooled across the board, pointing to mounting risks to achieving the government’s annual growth target.
Industrial output rose 4.5 per cent from a year ago, the National Bureau of Statistics (NBS) said on Saturday (Sep 14), below the median forecast of 4.7 per cent. It marked the fourth straight month of growth slowdown, the longest stretch since September 2021.
Retail sales increased 2.1 per cent, slowing from the previous month and missing economists’ projection of 2.5 per cent. Investment in fixed assets and property both disappointed.
The continued deceleration in industrial production shows even the more resilient part of the Chinese economy is losing traction. The weakening further darkens the growth outlook as domestic demand struggles to rebound while government investment is yet to pick up.
“The August’s data basically rules out the chance to attain the official target of 5 per cent growth in 2024, unless the top leadership is willing to launch a bazooka stimulus package,” said Raymond Yeung, chief economist for greater China at ANZ.
The data adds up to a gloomy picture for the world’s second-biggest economy. A vast majority of global banks, including JPMorgan Chase, now expect China’s economy to grow less than the 5 per cent target this year.
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Mizuho Securities Asia cut its 2024 gross domestic product growth forecast from 4.8 per cent to 4.7 per cent on Friday, citing what it said is “insufficient policy implementation by Chinese officials”. Economists have called for Beijing to introduce more stimulus after the economy expanded at its weakest pace in five quarters.
Authorities will “speed up the implementation” of policy measures to help the economy as they also seek to make structural reforms and guard against risks, NBS said in a statement accompanying the release.
“We should be aware that the adverse impacts arising from the changes in the external environment are increasing, effective demands remain insufficient at home, and the sustained economy recovery is still confronted with multiple difficulties and challenges,” the bureau said.
President Xi Jinping on Thursday urged government officials to “conscientiously implement” existing economic policies in the rest of the year to achieve full-year economic and social development goals.
The next day, the People’s Bank of China indicated it will step up its fight against deflation and prepare additional policies to revive the economy, after credit data showed private confidence remained weak despite previous rate cuts.
Provincial governments last month accelerated the issuance of special bonds, which are meant primarily for infrastructure investment. Still, total sales of the notes in the first eight months were the slowest in three years amid a dearth of suitable projects. Many regions are also focused on scaling back their debt burdens than investing.
Reflecting the impact of the slow fund-raising, fixed-asset investment increased 3.4 per cent on year in the January-August period, down from the 3.6 per cent growth in the first seven months, NBS figures showed.
Property investment continued contracting, falling 10.2 per cent in the period. BLOOMBERG
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