China April economic data at multi-year lows

Multiple Chinese economic indicators missed expectations Wednesday, with consumption and investment growth figures falling to multi-year lows, underlining sluggish momentum in the world's second-largest economy.

Growth in retail sales, a key indicator of consumer spending, fell to 10.0 percent in April, the National Bureau of Statistics (NBS) said, the weakest for nine years.

Fixed asset investment, a measure of government spending on infrastructure, expanded 12.0 percent in the first four months of the year, the lowest since 2000.

The median forecasts in polls of economists by Bloomberg News were for retail sales to rise 10.4 percent and fixed-asset investment to climb 13.5 percent.

Industrial output, which measures production at factories, workshops and mines, rose 5.9 percent in April, according to the NBS, improving from a 5.6 percent gain in March but also weaker than economists' estimate of 6.0 percent.
The statistics are the latest poor data to emerge in China, a key driver of global expansion, suggesting that stimulus measures taken by Beijing have yet to have an effect.

ANZ economists said the figures indicated GDP growth may have decelerated to below the government's annual target of 7.0 percent.

"Thus, more growth stabilisation policies could be expected to roll out," they wrote in a note.

China's gross domestic product (GDP) grew 7.4 percent in 2014, the lowest rate in 24 years.

Expansion slowed further to 7.0 percent in the January-March period, the worst quarterly result in six years and down from 7.3 percent in the final three months of 2014.

The central People's Bank of China on Sunday announced its third interest rate cut since November, and this year has twice reduced the amount of cash lenders must keep in reserve, as well as using other measures to inject liquidity into the market.

Liu Dongliang, a Shanghai-based economist with China Merchants Bank, said the April figures showed debt-laden local governments lacked funds to invest while slowing consumption growth could indicate household incomes were being squeezed.

"The economy is still under rather big downward pressure," Liu wrote in a research note.

- 'Complicated and severe' -

Continued April falls in imports and exports announced last week added to concerns over weakening momentum in China, while persisting mild consumer inflation statistics left room for further policy loosening.

Chinese stock markets have soared in recent months on expectations that authorities will take more measures to stimulate the economy.

The bourses were mixed on Wednesday in response to the data release.
The benchmark Shanghai Composite Index fell 0.58 percent to 4,375.76 while the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.82 percent to 2,445.87.

NBS spokesman Sheng Laiyun commented in a statement posted Tuesday that the Chinese economy was "operating in a reasonable range".

"Positive elements that will help the economy grow steadily continued to emerge and accumulate," he said, pointing to factors such as accelerating private-sector investment and booming online retail sales.

But he cautioned that the "complicated and severe foreign and domestic environment for economic development" was "unchanged", as reflected by the trade declines and falling factory gate prices.

The government will strengthen its economic fine-tuning to ensure a reasonable growth rate, he added.

Julian Evans-Pritchard, an analyst with research firm Capital Economics, said the effects of government policy moves would become clearer with time.

"The People’s Bank’s looser policy stance should begin to shore up activity in the coming months," he said in a report on the latest data.

"Policymakers... are likely to respond to any further signs of weakness by continuing to step up policy support to ensure that growth doesn’t slip much further," he said.