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

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.


Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.