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China’s Weak Economic Growth Held Rates Steady


June, 14 2018
watermark Economic news

China’s economy is starting to cool off following after lending concerns on riskier lending that further pushes higher borrowing costs of companies given slowdown economic activity from the output of data on Thursday.

Short-term rates remain unchanged that is worrisome for the central bank amid the economic condition earlier this day. Meanwhile, markets anticipate a rate hike of the Federal Reserve which is as planned.

Industrial output, investment, and retail sales are behind the numbers than expected which counters the positive trade data that could further weaken the economy if China supports ending factory pollution and tackles uncertain local government projects and shadow banking.

Data demonstration had the slowest investment growth in more than 22 years was surprisingly less-than-expected “by Chinese standards”, according to an economist of Rabobank that causes the reason of the central bank to put rates on hold.

There are evolving signs of the official data and unofficial reports where the regulatory countermeasure is about to affect a broader economy with companies saying its harder and more costs to secure finances and rising number of firms relying on bonds.

China’s fixed-asset investment advancement declined to  6.1 percent in the first four months of the year from the same period last year which has been the slowest pace since February 1996.

The investment growth is anticipated to remain a steady growth at 7.0 percent in the first month until May this year at a similar pace in period of January to April.

Industrial output in May climbed to 6.8 percent less than last year’s 7 percent over the same period.

Retail sales grew at 8.5 percent in May, with the slowest rate since June 2003 based on figures from Reuters while analysts expect an increase of 9.6 percent from 9.4 percent in April.

Slower retail sales growth are because of seasonal factors and consumers delaying purchases while declining fixed-asset investment growth because of weaker infrastructure investment, as mentioned by a spokesman at the National Bureau of Statistics, Mao Shengyong, to Reuters.

The nation will be able to sustain good momentum in the second half of the year and potentially grow to 6.5 percent for the whole year, which is still in line with the target of the government and poll of Reuters. On Friday, the United States is expected to release a list of  Chinese goods worth 50 billion dollars that will be subject to a 25 percent tariff.


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