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Economic growth continues to slow
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MAJOR indicators pointed to a further slowdown in China’s economic growth in August, prompting debate on whether the government should roll out more support policies to meet its growth targets and maintain the “new normal” state.
Figures released yesterday by the National Bureau of Statistics showed industrial production in the month grew just 6.9 percent year on year, down steeply from 9 percent in July, and its lowest level since the global financial crisis of 2008.
Retail sales growth also moderated, to 11.9 percent, from 12.2 percent a month earlier as sales of vehicles and furniture softened.
Fixed-asset investment, meanwhile, added 16.5 percent in the first eight months, decelerating from 17 percent in the January-July period, as funding in the property sector continued to slow.
“China’s real activity indicators ... reinforced our view that China’s growth momentum has decelerated faster than expected,” said Zhou Hao, an economist at Australia & New Zealand Banking Group.
Past experience suggests China needs to maintain about 9 percent industrial production growth to deliver 7.5 percent economic growth. So, “without outright policy easing, China will likely miss the growth target of 7.5 percent for this year,” Zhou said.
Guo Tongxin, an economist appointed by the statistics bureau, said the weak data were the result of higher comparative bases, structural reforms, and the deterioration of demand at both home and abroad.
“Recovery in developed countries stalled last month, while growth in emerging markets was affected by certain political and natural crises,” Guo said.
Major economies in the European Union reported negative growth rates in the second quarter, while Brazil was threatened by high inflation, Russia by economic sanctions due to the Ukraine crisis, and several African nations were hit by the Ebola outbreak.
The government needs to undertake a “comprehensive and objective analysis of all these factors to decide what steps to take next,” Guo said.
Many economists have been calling for more easing policies. With inflation still moderate, there is room for measures to boost market liquidity, they said.
But the central bank has been reluctant to take such a step, as it sees the current rate of expansion of M2 — the broadest measure of money supply and liquidity — as sufficient to deliver decent economic growth.
On Wednesday, Premier Li Keqiang hinted that additional support measures were unlikely when he said the government would not be distracted by minor fluctuations in individual performance indicators.
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