May data from Chinese industry and retail trade confirm that the economic recovery is stalling. The data did increase, but from last year’s low base when the economy was weighed down by severe pandemic measures. Citing government data, news agencies report this today. Analysts say this is raising expectations that the Chinese government needs to take more measures to support the still rather shaky post-pandemic recovery.
Growth, but slower
China’s industrial output rose 3.5 percent in May, about what analysts had expected. However, growth slowed compared to the previous month. Manufacturers are struggling with weak demand at home and abroad.
Retail sales growth of 12.7 percent was also lower than in April and fell short of analysts’ expectations, who had estimated it at 13.6 percent. In April, retail sales rose 18.4 percent.
A bubble?
The latest data support recent growing concerns about the world’s second-largest economy, which is only slowly emerging from pandemic lows. The impression is reinforced by continued weakness in China’s property market, which has grown too fast over the years. Experts talk of a bubble. Investment in that market fell 7.2 percent year-to-date through May, more than expected.
“All the data so far have sent consistent signals that economic momentum is weakening,” said Zhiwei Zhang, an analyst at Pinpoint Asset Management in Hong Kong, according to Reuters.
The central bank is therefore trying to stimulate the economy with loose monetary policy. In a surprise move on Tuesday, it cut the key short-term interest rate by a tenth of a point to 1.90 percent. Then today it cut the interest rate on one-year loans it provides to banks and financial institutions by a tenth of a point. This is the first such easing in ten months.
Source: ČTK
