BEIJING: China’s fixed-asset investment, a main measure of government spending on infrastructure, rose at its slowest pace in more than 12 years in January-April, data showed Tuesday, fuelling calls for Beijing to act to boost the economy.
Growth in the world’s second-largest economy is decelerating, but leaders in Beijing say they want to wean the country off investment as the key driver of expansion and shift the focus to consumer spending.
Fixed-asset investment increased 17.3 percent year-on-year in the first four months of 2014, slowing from 17.6 percent in the first three months, the National Bureau of Statistics (NBS) said.
The figure is only released cumulatively, and the reading was the lowest since a 13.7 percent increase for the whole of 2001, NBS data showed.
It was one of several statistics adding to concerns over the weakening of China’s economy, a key driver of global growth, and analysts called on Beijing to ease its monetary policy.
“The pressure for more policy easing continues to build,” Zhang Zhiwei, Nomura’s economist based in Hong Kong, said in a research note.
Industrial output, which measures production at factories, workshops and mines, increased 8.7 percent year-on-year in April, the NBS said, edging down from 8.8 percent a month earlier. The indicator rose 8.6 percent in the first two months of the year, the slowest in five years, previous data showed.
And retail sales, a gauge of consumer spending, grew 11.9 percent year on year, the NBS added, down from a 12.2 percent rise in March.
The figures are the latest to show a slowdown in the economy, which grew 7.4 percent year-on-year in the first three months of 2014. That figure was weaker than the 7.7 percent in October-December and the worst since a similar 7.4 percent expansion in the third quarter of 2012.
Premier Li Keqiang in March announced a growth target of “around 7.5 percent” for 2014.
Officials have publicly ruled out a massive stimulus to kickstart growth but have instead introduced a series of smaller measures, including a cut in the amount of money rural banks have to keep in reserve, tax breaks for small enterprises and targeted infrastructure outlays.
But ANZ analysts Liu Ligang and Zhou Hao said the growth target was unlikely to be achieved without a cut in interest rates as well.
“If the government still views that achieving a 7.5 percent growth target is important for its credibility, China’s monetary policy will have to play its necessary role by easing further in order to help pull the economy out of a state of lethargy,” they said in a report.
China in April cut the reserve requirement ratio for rural banks by up to two percentage points, the first such move since May 2012, when it slashed the ratio to 20 percent for large financial institutions and 16.5 percent for smaller ones.
It has not reduced lending rates since July 2012.
Some economists, however, believe the current policies are sufficient to prevent growth from decelerating further and Beijing is unlikely to rush to take more aggressive measures.
In a research note Louis Kuijs and Tiffany Qiu of Royal Bank of Scotland attributed the investment growth deceleration to earlier monetary tightening, corporate reluctance to expand capacity, and a slowdown in the real estate sector.
“We expect the current approach to macroeconomic policy—supporting growth without resorting to major stimulus—to be broadly maintained,” they said.
China’s bank lending fell sharply in April from March, data showed Monday, after central bank governor Zhou Xiaochuan reportedly ruled out the possibility of any massive stimulus at a forum over the weekend, adding his institution would only fine-tune its policy.