Weakness in China investment will add to calls for Beijing action
Economic situation improves as monetary easing takes hold, but further steps needed amid worsening trade outlook, analysts say
China’s economic activities appear to have hit bottom, but the government will need further easing measures to stabilise the still-fragile recovery, analysts say.
After exports growth slumped and imports fell sharply last month, the government will have to rely more on kicking off fresh investment to offset a worsening trade outlook. And that means financing should also be eased.
Fixed-asset investment, after slipping to single digit growth for the first time in 12 years in April, managed to recover to 9.9 per cent from a year earlier, data from the National Bureau of Statistics showed on Thursday.
But the bureau’s senior economist Wang Baobin remained cautious. “Funding bottlenecks and a lack of newly started projects may still curb investment growth going forward,” Wang said.
Over the past few years, the new leadership has had to fight against serious overcapacity and deflationary pressures as a legacy of massive stimulus since 2008.%
A slow recovery seemed to be under way.
Growth in factory output hit a three-month high of 6.1 per cent in May from a year earlier, exceeding April’s 5.9 per cent growth, while retail sales held steady, the bureau said.
