BEIJING: China’s strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree.
Industrial output, investment, retail sales and trade all grew less than expected last month, after the world’s second-largest economy put in a surprisingly strong showing in the first half, adding fuel to a global recovery.
But economists do not expect any hard landing, with the government keen to ensure stability ahead of a once-in-five-years Communist Party leadership reshuffle in the autumn.
“The upshot is that both foreign and domestic demand appear to have softened at the start of the third quarter,” said Julian Evans-Pritchard, China economist at Capital Economics.
“A few sectors, such as steel, seem to have defied this slowdown in economic activity. But the strength in these areas likely won’t last given that policy tightening is set to further weigh on infrastructure and property investment in coming months.”
Factory output rose 6.4 per cent in July from a year earlier, the slowest pace since January, according to data from the National Bureau of Statistics on Monday. Despite the softer-than-expected reading, manufacturing activity still appears to be supported for now by an extended infrastructure boom. Beijing has been pouring money into road and rail projects that have fuelled demand for products from construction equipment to glass and steel. Growth in property investment eased to 4.8 per cent in July from a year earlier, versus 7.9 per cent in June, official data showed.
New construction starts measured by floor area, a telling indicator of developers’ confidence, contracted for the first time since last September, falling 7 per cent in July on-year. — Reuters
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