View Issue #584 Now!
China’s economy stumbles in May, growth seen sliding in Q2
Risks are rising that China’s economic growth will slide further in the second quarter after weekend data showed unexpected weakness in May trade and domestic activity struggling to pick up.
Evidence has mounted in recent weeks that China’s economic growth is fast losing momentum but Premier Li Keqiang tried to strike a reassuring note, saying the economy was generally stable and that growth was within a “relatively high and reasonable range”.
China’s economy grew at its slowest pace for 13 years in 2012 and so far this year economic data has surprised on the downside, bringing warnings from some analysts that the country could miss its growth target of 7.5 percent for this year.
“Growth remains unconvincing and the momentum seems to have lost pace in May,” Louis Kuijs, an economist at RBS, said in a note. “The short-term growth outlook remains subject to risks and we may well end up revising down our growth forecast for 2013 further.”
Exports posted their lowest annual growth rate in almost a year in May at 1 percent, exposing a more realistic picture of trade following a crackdown by authorities on currency speculation disguised as export trades to skirt capital controls, which had created double-digit rises in export growth every month this year even as world growth stuttered.
May exports to both the United States and the European Union - China’s top two markets - both fell from a year earlier for the third month running.
Imports fell 0.3 percent against expectations for a 6 percent rise as the volume of many commodity shipments fell from a year earlier.
The volume of major metals imports, including copper and alumina, fell at double-digit rates. Coal imports fell sharply.
“The trade data reflects the sluggish domestic and overseas demand, signalling a slower-than-expected recovery in the second quarter,” said Shen Lan, an economist at Standard Chartered bank in Shanghai.
A government factory survey of purchasing managers and a similar poll sponsored by HSBC, both issued earlier this month, showed export orders falling in May, suggesting the outlook remained grim.
Inflation, bank-lending growth and investment were below expectations in May, while factory output and retail sales rose around the same pace as in April.
China’s consumer inflation slowed to 2.1 percent, the lowest in three months, while producer prices (PPI) fell 2.9 percent, the lowest since September. A Reuters poll had forecast consumer inflation at 2.5 percent and factory-gate prices down 2.5 percent.
“The inflation data showed China’s economic growth continued to slow down. Second-quarter growth is probably even slower than the first quarter. In particular, the PPI data showed very weak demand,” said Jianguang Shen, chief China economist at Mizuho Securities Asia in Hong Kong.
Central bank data showed Chinese banks made 667.4 billion yuan ($109 billion) in new loans in May, below market expectations of 850 billion yuan and down from April’s 792.9 billion yuan.
M2 money supply rose 15.8 percent from a year earlier, slightly below a median forecast of 15.9 percent, while total social financing, a broad measure of cash in the economy, was 1.19 trillion yuan versus 1.75 trillion yuan in April.
Retail sales, fixed-asset investment and industrial output met expectations, rising 12.9 percent, 20.4 percent and 9.2 percent from a year earlier, respectively.
Rates & Other Remedies
Economic growth slipped to 7.7 percent in the first quarter, down from 7.9 percent in the previous quarter. Both the International Monetary Fund and the Organisation for Economic Co-operation and Development cut their forecasts for China’s economic 2013 economic growth in May, to 7.75 percent and 7.8 percent, respectively.
But the further loss of momentum in the April and May could prompt the central bank to try to give the economy a lift, said Jian Chang, China economist for Barclays in Hong Kong.
“We had expected an L-
American Journal of Transportation
116 Court Street, Suite 5
Plymouth, MA 02360
© Copyright 1999–2014 American Journal of Transportation.All Rights Reserved.