Tuesday, May 13, 2014

CHINA MANUFACTURING



Watch: Is China's slowing economy a bad thing?

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China has released weaker-than-expected manufacturing data, reinforcing concerns the world's second-largest economy is losing steam.

Industrial output rose by 8.7% in April from a year earlier, compared with estimates for an 8.9% increase.

Retail sales and fixed-asset investment spending also came in below forecasts.

The figures add to speculation the Chinese government may miss its 2014 growth target of 7.5% given they are undertaking key economic reforms.

Some analysts are expecting China to post its weakest expansion since 1990 this year.

China's National Bureau of Statistics said retail sales increased by 11.9% in April, which was below estimates for a 12.2% rise.

Fixed-asset investment, which is an indicator of government spending on infrastructure, rose 17.3% in the January-to-April period, versus estimates for growth of 17.7%.

Woman in China textile factory Some analysts think the government may have to take action to spur growth

The slowdown comes amid a push by the government to address risks to the economy, such as shadow banking or illegal lending.

As a result, Beijing has taken steps to rein in excess credit in its financial system, as well as cool the country's property market.

However, China's slowdown has led for increased calls for the government to take steps to stimulate the economy, such as lowering borrowing costs.

Zhiwei Zhang, chief China economist at Nomura expects "activity indicators to continue to weaken in May".

"The pressure for more policy easing continues to build, though in his latest speech People's Bank of China Governor Zhou Xiaochuan indicated that the government may want to wait for more data before deciding whether to ease policy or not," he said.

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