China’s economy shows further weakness as retail sales struggle

Chinese retail sales expanded 7.2 percent last month, well off the 8.4 percent tipped by economists and a big drop from March. (AFP)
Updated 15 May 2019
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China’s economy shows further weakness as retail sales struggle

  • Authorities have been attempting to transition the world’s number two economy from being reliant on state investment and exports to a more stable one
  • The readings fanned speculation that authorities will unveil another round of pump-priming measures

BEIJING: China’s economy showed further signs of weakness in April as the slowest growth in retail sales for 16 years highlighted the task leaders have in ramping up domestic demand at the same time as fighting a painful trade war with the US.
Authorities have for years been attempting to transition the world’s number two economy from being reliant on state investment and exports to a more stable one driven by China’s huge army of consumers, with the tariffs stand-off reinforcing the need for such a change.
But the latest figures on Wednesday show retail sales expanded 7.2 percent last month, well off the 8.4 percent tipped by economists in a Bloomberg News survey and a big drop from March.
The figures from the National Bureau of Statistics (NBS) represent the worse pace since 2003, at the height of the SARS crisis.
The bureau also said growth in industrial production slowed sharply to 5.4 percent from, while fixed asset investment in the four months to April rose 6.1 percent. Both missed Bloomberg estimates.
The readings fanned speculation that authorities will unveil another round of pump-priming measures — having wound back on such stimulus in recent weeks following signs of a bounce in the economy — with Shanghai’s composite index jumping more than one percent Wednesday.
Beijing has rolled out huge tax-cuts and other measures this year to ramp up the economy and offset the impact of a trade war that has seen the US impose tariffs on hundreds of billions of dollars worth of Chinese goods, causing worries for exporters.
However, while leaders will want to prevent the economy from taking a bad hit, Julian Evans-Pritchard of Capital Economics was skeptical about how much they will do.
“With the scale of stimulus likely to remain smaller than in previous downturns, we don’t anticipate a strong recovery,” he said.
On a brighter note, Betty Wang, an economist at ANZ bank, said in a research note that property investment had picked up over the first four months of the year thanks to “a big jump in developers’ funding conditions,” with bank loans, down payments and mortgages all growing at a quicker pace.


Oil rises on US-Iran tensions, but trade war concerns weigh

Updated 21 May 2019
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Oil rises on US-Iran tensions, but trade war concerns weigh

  • There are expectations producer club OPEC will continue to withhold supply this year
  • President Donald Trump on Monday threatened Iran with ‘great force’ if it attacked US interests in the Middle East

SINGAPORE: Oil prices rose on Tuesday on escalating US-Iran tensions and amid expectations that producer club OPEC will continue to withhold supply this year.
But gains were checked by concerns that a prolonged trade war between Washington and Beijing could lead to a global economic slowdown.
Brent crude futures, the international benchmark for oil prices, were at $72.24 per barrel at 0534 GMT, up 27 cents, or 0.4 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 26 cents, or 0.4 percent, at $63.36 per barrel.
“Escalating tensions between the US and Iran, in addition to signs that OPEC will continue its production cut, drove oil higher,” said Jasper Lawler, head of research at futures brokerage London Capital Group.
US President Donald Trump on Monday threatened Iran with “great force” if it attacked US interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.
Iran said on Tuesday that it would resist US pressure, declining further talks under current circumstances.
The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers have been withholding supply since the start of the year to prop up prices.
A meeting has been scheduled for June 25-26 to discuss the policy, but the group is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signaling a willingness to continue withholding output.
Price gains were constrained by pressure on financial markets, which have this week been weighed down by worries that the United States and China are digging in for a long, costly trade war that could result in a broad global slowdown.
Singapore, seen as a bellwether for the health of the global economy, on Tuesday posted its lowest quarterly growth in nearly a decade of 1.2 percent year-on-year. Growth in Thailand, a key Asian emerging market, also slowed to a multi-year low.