World

China's August industrial output growth grinds to 17-1/2 year low

Reuters BEIJING | Updated on September 16, 2019 Published on September 16, 2019

Earlier, a factory survey showed activity shrank for the fourth straight month as the US trade war dragged on.   -  Reuters

Production rose 4.4 per cent year-on-year in August, the slowest growth since February 2002

The slowdown in China's factory and consumer sectors deepened in August, with industrial production growing at the weakest pace in 17-1/2 years, a sign of increasing weakness in an economy lashed by trade headwinds and soft domestic demand.

Production rose 4.4 per cent in August year-on-year, slower than the 4.8 per cent growth in July. Analysts polled by Reuters had forecast output would rise 5.2 per cent. August's data is the slowest growth since February 2002.

Chinese Premier Li Keqiang said in an interview published ahead of the data on Monday that it would “very difficult” for the economy to continue growing at 6 per cent or more and that it faced “downward pressure”.

The data also showed retail sales growth at 7.5 per cent, below the 7.9 per cent expected in a Reuters poll and the 7.6 per cent increase in July.

Fixed-asset investment for the first eight months of the year rose 5.5 per cent, according to data published by the National Bureau of Statistics, compared with a 5.6 per cent rise forecast by analysts.

Data last week showed factory-gate prices fell at their fastest pace in three years and analysts predict that producer deflation will continue to worsen in the coming months.

It also follows a factory survey that showed activity shrank for the fourth straight month as the US trade war dragged on. China's imports of unwrought copper also fell 3.8 per cent year-on-year in August, a metal with wide use in infrastructure, power and consumption.

China is in the midst of a more-than-a-year-long trade war with the US that has upended global supply chains. Trade negotiators are expected to meet later this month, with a top-level summit meeting to be held in Washington in October, though a resolution appears unlikely.

US President Donald Trump had said he would heap on another 5 per cent in tariffs in late August on all $550 billion worth of Chinese goods imported into the US.

To counter the weakness, analysts expect the latest slew of numbers will lead to more cuts to key lending rates from Chinese authorities. The government has said it will keep a relatively restrained hand.

China has already cut the amount of cash banks are required to hold in reserve, a move that is expected to release 900 billion yuan ($126.35 billion) for lending to businesses that need the credit.

Private sector fixed-asset investment, which accounts for about 60 per cent of the country's total investment, grew 4.9 per cent in January-August, compared with a 5.4 per cent rise in the first seven months of 2019.

Published on September 16, 2019

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