BEIJING: China’s industrial output and retail sales growth accelerated in August, government statistics showed on Tuesday, with both of them exceeding expectations in encouraging signs for the world’s second-largest economy.
Industrial production rose 6.3 percent year-on-year, the National Bureau of Statistics (NBS) said, faster than July’s 6.0 percent and above the median forecast of 6.2 percent in a Bloomberg News poll of economists.
Retail sales, a key measure of consumer spending, rose 10.6 percent in August, the NBS said, also ahead of expectations and the July figure.
Beijing is looking to retool the economy from a reliance on investment spending and exports to one driven more by consumer demand, but the transition has proven bumpy and gross domestic product growth has been slowing.
China is a key driver of the world economy but grew at its slowest rate in a quarter of a century last year, and has decelerated further since then.
“In August… some indicators picked up, efforts of cutting overcapacity, reducing inventory, deleveraging, lowering costs and strengthening weak links achieved notable results,” said NBS spokesman Sheng Laiyun.
“The national economy has achieved moderate but steady and sound development,” he added, but urged caution.
“We must be aware that the domestic and external economic conditions are still complicated and severe with many instabilities and uncertainties,” he said.
Fixed asset investment, a gauge of infrastructure spending, was up 8.1 percent in the first eight months of the year, matching the figure for the January-July period.
Retail sales beat expectations of 10.2 percent in a Bloomberg News poll of economists, while fixed asset investment was ahead of the 7.9 percent estimate.
But analysts were cautious about the figures, and investors gave them a mixed response, with the benchmark Shanghai Composite Index slipping 0.18 percent by the break.
“Today’s data fits with our long-running view that the delayed impact of earlier policy easing means that a stronger second half to this year is likely,” Julian Evans-Pritchard, China economist at Capital Economics, said in a note.
But he said that further monetary easing was “unlikely in the near-term”, so that “this uptick in economic activity is likely to fizzle out going into next year”.
Beijing has listed reducing overcapacity and excess inventory and cutting down borrowing as top priorities, with the country’s ailing steel industry — accused by US and European rivals of dumping on world markets — a key target.
Authorities have set a goal to cut 45 million tons of annual steel capacity this year, with the official Communist mouthpiece People’s Daily last month saying around 21 million tons had been eliminated by July.
But actual production of crude steel was up 3.0 percent year-on-year in August, the NBS figures showed, accelerating from 2.6 percent the previous month.
“We expect investment to remain under pressure in the rest of the year because of slower real estate construction and spare capacity in key sectors,” Louis Kuijs, head of Asia economics at Oxford Economics, wrote in a note.
“But with industrial profits recovering recently and investment itself also, in August, the downward pressure should diminish.”
Maintaining growth is a key priority for China’s Communist party, which is keen to avoid the risk of unemployment-driven social unrest, and claims rising living standards in recent decades as part of its right to rule.
Sheng said employment could remain stable despite slowing growth as “labor-intensive” service industries were making up more of the economy. One percentage point of GDP growth now creates 1.7 million jobs, he said, 400,000 to 500,000 more than in 2011-2013.