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China’s economy continues to cool as July data disappoints

China’s economy continues to cool as July data disappoints

BEIJING: China’s economy appears to be cooling again with the latest broad batch of data appearing to retrace much of momentum gained in recent months. The key monthly figures released by the National Bureau of Statistics show industrial production, fixed asset investment and retail sales all slipped back in July and were all lower than expected. Capital Economics China economist Julian Evans-Pritchard noted both foreign and domestic demand appear to have softened at the start of third quarter. “A few sectors, such as steel, seem to have defied this slowdown, 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 quarters,” Mr Evans-Pritchard said. “Industrial production still looks unsustainably strong given the growing headwinds to investment growth from policy tightening.”

Retail sales growth also slowed, particularly in areas related to the property sector, such as furniture, decorating materials and white goods, while consumers also put the brakes on the automotive sector. NAB’s Gerard Burg said, while July was weaker, most of the indicators were largely returning to their trend growth. “New construction starts slowed significantly in July, although it is too early to tell if policies designed to cool conditions in the real estate and construction sector are impacting, Mr Burg said. “We have been expecting construction activity to slow for some time, but we are cautious not to read too much into July’s relative weakness – particularly given the strength in China’s steel output.” However, Mr Burg said Chinese steel demand and iron ore consumption is likely to fall in coming months.