Tuesday 27 January 2015

Weak start to year for China's economy

Published 11/03/2013 | 05:00

Communist Party Chief Xi Jinping reads as attendants serve tea at the Great Hall of the People during a session of the National People's Congress in Beijing yesterday

INDUSTRIAL output in China had the weakest start to a year since 2009, while lending and retail sales growth also slowed.

The newly released data for the world's second biggest economy heightens the challenges faced by the country's new leadership as it seeks to narrow the gap between rich and poor in the sprawling country.

Production increased 9.9pc in the first two months and retail sales rose 12.3pc – trailing economists' estimates.

The country's leadership enters its final week of meeting at the National People's Congress in Beijing.

The country's once-in-a-decade leadership transition was completed during the congress this week. China's exports jumped 23.6pc in the first two months of the year, the most for a January-February period since 2010.

But the decline in four February purchasing managers' indexes, and official data released over the past week, are raising concerns that a recovery that started in the fourth quarter may be peaking, even as house-price gains accelerate and inflation risks increase.

"Exports are still an important growth driver for China, so the pick-up should make policy-makers less concerned about the disappointment in some of the other indicators," said Louis Kuijs, chief China economist at Royal Bank of Scotland in Hong Kong.

"When push comes to shove, they know the recipe to kick-start growth, so if things do slow down to a rate they aren't comfortable with, they can encourage investment."

The growth in January-February retail sales was below the lowest economic projection of 13.8pc and was the smallest for that period since 2004.

The moderation follows a crackdown by new Communist Party chief Xi Jinping on lavish spending by government officials and state-owned companies, part of efforts to curb corruption and waste.

Irish Independent

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