Business Maverick

Business Maverick

China April industrial output up 5.4%, much less than expected, retail sales also falter

People work on machines in Foxconn factory in Guiyang, Guizhou Province, China, 28 May 2018. Guiyang Foxconn factory produced 16 million smartphones for Nokia and Huawei in 2017 and hope to reach 30 million in 2018. Foxconn Technology Group is a multinational electronics contract manufacturing company headquartered in Taiwan. Since set up in 1974 by Terry Gou, it nowadays employs more than one million poepl in its main production base China. The company produces smartphones, tablet computers and television sets for clients from around the world. EPA-EFE/Aleksandar Plavevski

Growth in China's industrial output slowed more than expected to 5.4 percent in April from a 4-1/2 year high in March, reinforcing views Beijing will have to roll out more stimulus measures as a trade war with the United States intensifies.

Growth in China’s industrial output slowed more than expected to 5.4 percent in April from a 4-1/2 year high in March,. Analysts polled by Reuters had forecast industrial output would grow 6.5%, slowing from an unexpectedly strong 8.5% in March.

Fixed-asset investment rose 6.1% in January-April from the same period last year, also lagging expectations, the National Bureau of Statistics said on Wednesday.

Analysts had predicted a 6.4% increase, picking up slightly from 6.3% in January-March.

Private-sector fixed-asset investment, which accounts for about 60 percent of overall investment in China, rose 5.5% in the same period, compared with a increase of 6.4% in the first three months of the year.

Retail sales rose 7.2% in April on-year, the slowest pace since May 2003, sharply down from March’s 8.7% and missing a forecast rise of 8.6%.

The United States escalated a tariff war with China on Friday by hiking levies on $200 billion worth of Chinese goods in the midst of last-ditch talks to rescue a trade deal. China retaliated on Monday, though on a smaller scale.

The U.S. move comes as China’s economy was beginning to show tentative signs of improvement after a flurry of support measures, though analysts had cautioned it was too early to call a recovery.

Economists at Citi estimate the U.S. tariff increase could lop 50 basis points off China’s GDP growth, reduce exports by 2.7 percent and cost the country another 2.1 million jobs, though they are optimistic a trade deal will be reached eventually.

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