In China, lacklustre growth may support more easing

Below-expectation results for the Chinese economy in July indicate that stimulus measures have not yet boosted growth and may demand further stimulus. Two out of three activity measures decelerated compared with the prior month, according to the results. Growth of fixed asset investment fell half a point to 5.5% while retail sales suffered a 0.2-point decline to 8.8%. “We think today’s data will likely reinforce the direction of recent policy changes and may well prompt more policy easing in the coming weeks,” said Aidan Yao, senior emerging Asia economist at Axa Investment Managers. Some parts of the economy were shown to be growing strongly. Manufacturing investment and property investment were two areas that defied the broad slowdown. However, consumer demand seemed to be shrinking. In real terms, retail sales growth has now fallen to 6.5%, which is below real GDP growth of 6.7%, according to Yao's calculations. This trend, “does not bode well for continued economic rebalancing”, he said. ©2018 funds global asia

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