Business

China data raises doubts over growth

  • 13 August 2014
  • From the section Business
Shanghai skyline
China's economy has shown growth across various sectors

China's latest industrial production and retail sales figures are higher in July from one year ago but the pace of expansion has slowed.

Industrial production, a measures of output at factories, workshops and mines jumped 9% in July, compared to a 9.2% rise in June.

Retail sales in July rose by 12.2%. But that's also below June's 12.4% spike.

The latest data is raising doubts about China meeting its full year growth target of 7.5%.

Hu Yuexiao, analyst with Shanghai Securities based in Shanghai said: "We expect further loosening measures to guarantee a steady economic growth in the coming months. Such measures could include an interest rate cut, and cutting red tape to attract more private capital into the infrastructure and service industries."

Boosters

In recent months, policymakers in China have unveiled a series of measures to help boost growth in the world's second largest economy.

The steps include plans to cut taxes on small firms and speed up the construction of railway lines across the country.

China's central bank has also made more cash available for banks engaged in lending to agriculture-related businesses and small companies.

It has done so by lowering the reserve requirement ratio (RRR) - the amount of cash banks needs to keep in reserve.

The central bank has said it will also encourage banks to lend more to exporters to boost shipments.

The Chinese government has set a full year growth target of 7.5%. That is the same rate as last year. China's economy grew by 7.7% in 2013.

Mixed signals

Last week, China's trade figures showed a 14.5% jump in exports for July, compared with a year ago.

That surge in exports had led many analysts to believe that strong external demand will keep the Chinese economy on the growth track for the rest of the year. The latest trade data puts China's trade surplus at a record $47.3bn (£28bn) for July.

And data from earlier this month showed factory activity in China grew at its fastest pace in more than two years in July.

The state's official purchasing managers index (PMI) rose to 51.7 in July, from 51 in June.

The PMI is a key gauge of the health of the manufacturing sector and a reading above 50 indicates expansion.

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