A man walks trough corn crops on the farm amid drought, in the village on the outskirts of Jiujiang, Jiangxi Province, China, 25 August 2022. (Photo: EPA-EFE/ALEX PLAVEVSKI) 
As pressure builds on policymakers to roll out more stimulus, data due Saturday will show growth in industrial production slipped in August for a fourth straight month, in what would be its longest deceleration in almost three years. A slower expansion in activity also extended to retail sales and investment, according to analysts surveyed by Bloomberg.
The widespread weakness would be a signal of how little traction the $17 trillion economy has generated in recovering from its worst stretch in five quarters. Heat waves — coupled with torrential rains that snarled travel and flooded farmland and mines — have added to setbacks for Beijing and its pursuit of growth around 5%, a goal most global banks now believe might be out of reach.
“The economy was under a double whammy of weather shocks and weak demand in August,” Citigroup Inc. economists including Xiangrong Yu said in a report this week. “The ‘around 5%’ growth target could be at risk.”
The snapshot of activity will be the last reading before China releases its estimate of gross domestic product for the third quarter next month.
Evidence is already mounting that the world’s second-biggest economy is losing momentum, prompting analysts at banks including JPMorgan Chase & Co. and Nomura Holdings Inc. to slash their projections. UBS Group AG cut its 2024 GDP growth forecast from 4.9% to 4.6% last month.
What Bloomberg Economics Says...
“China’s August activity data due Saturday will probably show the recovery lost more momentum. Weakness appears to have been widespread. Investment likely slowed further as bad weather disrupted construction projects and local governments struggled to deliver on spending plans. This may have damped industrial production.”
— Chang Shu, chief Asia economist, and David Qu, economist. For full analysis, click here
The figures for August will follow a meeting of China’s top lawmakers this week. Their gathering could endorse a plan to gradually raise the retirement age in a country where a worsening demographic crisis is weighing on its long-term economic potential.
Delaying retirement would slow the decline of China’s labour force while also presenting a more immediate threat to already-brittle sentiment among people who are uneasy over the prospect of working into their older years.
China’s core inflation — which strips out volatile items such as food and energy — cooled in August to the weakest in more than three years. As price pressures became more subdued, a former central bank governor made a rare appeal to focus on fighting deflation, a phenomenon that could hold back the economy if falling costs lead consumers to delay purchases and businesses to slash wages.