China’s economy loses steam in August
September 19, 2017 Category China News Round-up, Weekly
China’s economy lost momentum in August, with industrial output and retail sales both seeing slower growth, though the weaker figures are unlikely to have come as a surprise to Beijing as it continues to implement supply side reforms. An emphasis on environmental protection also had an impact on economic growth. For officials in many parts of the country the environment has now overtaken economic expansion as their top priority. President Xi Jinping has made cleaning up the environment one of his top priorities. Thanks to the stronger-than-expected 6.9% growth achieved in first half of 2017, the government was able to shut down unwanted and polluting industrial plants without endangering its economic growth target of 6.5% for 2017, even if the economy slows further in the coming months.
China’s industrial output in August rose 6% from the same month of 2016, the National Bureau of Statistics (NBS) said. The figure was below analysts’ estimates of 6.6% and the 6.4% recorded in July. “Production restrictions and severe crackdowns on polluters have led to output declines from cement to non-ferrous metals,” said Wang Tao, Chief China Economist with UBS.
Retail sales in August expanded 10.1% from a year ago, their slowest monthly rate this year, while fixed-asset investment (FAI) in urban areas rose 7.8% in the first eight months of 2017, its slowest pace since 1999. Energy-intensive manufacturing sectors reported the most significant slowdowns in August. A noticeable appreciation of the yuan in 2017 has also weakened China’s export momentum.
The latest economic data also contains positive signs. The service sector grew by 8.3% year-on-year in August, responding to structural adjustments and optimization. Last month, the output of high-tech industries and the high-end equipment manufacturing industry rose by 12.9% and 11.6% respectively. From January to August, investment in the real estate sector increased by 7.9% from a year earlier.
Despite the downturn, Premier Li Keqiang said he was confident the country would maintain the strong economic growth it achieved in the first half of the year. He made the remark after a round-table meeting with the heads of six global agencies, including the World Bank, International Monetary Fund (IMF), and the World Trade Organization (WTO).
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