CHINA ECONOMY SLOWDOWN

Fresh data highlight slowdown in Chinese economy

Friday, June 12, 2015   Hong Kong Standard

China's ailing economy showed few signs of improvement in May, with factory output steadying but investment growing at its slowest rate in nearly 15 years, pointing to further weakness unless Beijing ramps up its stimulus efforts.
A flurry of data from power output to retail sales released yesterday showed no convincing pickup in the economy despite three interest rate cuts since November.
Fixed-asset investment, a crucial driver of China's economy, rose 11.4 percent in the first five months of this year from the year- earlier period, missing a Reuters poll forecast for a 12 percent gain, the same as in April.
Manufacturing activity, by comparison, showed signs of steadying, but remained at subdued levels. Factory output rose 6.1 percent in May compared to a year ago, largely in line with expectations and up marginally from April. Other indicators also pointed to persistent weakness, with electricity output unchanged from a year earlier. ANZ noted railway cargo declined by 11.5 percent, the lowest level on record, reflecting weak domestic trade flows.
Separate data from the central bank showed growth in the broad M2 money supply picked up more than expected to 10.8 percent, but remained within sight of a record-low 10.1 percent struck in April.
China's banks made 900.8 billion yuan (HK$1.12 trillion) worth of new loans in May, up sharply from April.
However, economists say banks remain wary of lending, and suspect many "new" loans may be rollovers of existing debt.
"Money is still not flowing into the real economy and most Chinese companies continue to face a serious problem in fund- raising," said Zhu Qibing, a macro strategist at China Minzu Securities in Beijing.
The central bank, meanwhile, said it will continue to push for the yuan's inclusion in the IMF's currency basket.
New Zealand and South Korea cut interest rates yesterday to counter subdued exports to China. REUTERS