The national statistics bureau said on Tuesday that industrial output grew 10.4% year-on-year in August
Retail sales were up 13.4 per cent year-on-year, accelerating from 13.2 per cent growth in July
A surge in credit issuance is also seen by analysts as one of the factors behind the improving economy
Chinese industrial output, investment and retail sales all strengthened in August, the latest evidence of an upswing in growth in the world’s second-biggest economy.
Coming on the heels of robust export figures and muted inflation, the recent data leave little doubt that the Chinese economy has rebounded after a shaky half-year. Although analysts still question the durability of the recovery, China’s strong run of form should help the government hit its target of 7.5 per cent growth this year.
The national statistics bureau said on Tuesday that industrial output grew 10.4 per cent year-on-year in August, up from a 9.7 per cent pace in July and beating market forecasts. Retail sales were up 13.4 per cent year-on-year, accelerating from 13.2 per cent growth in July. Fixed-asset investment, expressed in year-to-date terms, rose 20.3 per cent in August, up from 20.1 per cent in July.
The indicators “confirm a cyclical pick-up in China’s economic growth that started in July,” said Louis Kuijs, an economist with RBS. “Domestic demand has recently been buoyed by continued robust property construction and, policy-wise, the first impact of some measures to support growth.”
Two months ago, when worries were mounting about the Chinese economy, the government unveiled a “mini-stimulus” cutting taxes for small business, ramping up investment in the rail sector and cutting back on administrative red tape for exporters.
A surge in credit issuance at the start of the year is also seen by analysts as one of the factors behind the improving economy, with the money taking a while to work its way through the financial system to fuel investment activity.
The good economic news is also being reflected in China’s asset markets, with property prices growing at more than 10 per cent a year and stocks rallying over the past two months.
But the recovery could soon run into headwinds, as the big jump in credit growth at the start of the year has tapered off since June.
Xi Jinping, China’s president, said this week that the government wanted to bring the growth rate down “to a certain extent to solve the fundamental problems” of the economy. The International Monetary Fund, among others, has warned that an excessive reliance on investment and an increasing dependence on debt are shaky foundations for China’s long-term development.
Li Keqiang, China’s premier, wrote in the Financial Times on Monday that the government wanted to press ahead with economic reforms as the “driving force” for growth. “We can no longer afford to continue with the old model of high consumption and high investment,” he said.