China industrial output growth weakest in 17 years in July

China industrial output growth weakest in 17 years in July

Growth in Chinese industrial output fell to its slowest rate in 17 years in July, official data indicated, in the latest sign that demand for goods in the world’s number two economy is sliding amid a damaging trade war with the US. 

Data from the country’s National Bureau of Statistics published on Wednesday showed that industrial output – a broad measure of manufacturing production – rose by 4.8 per cent during the month, or its weakest rate since February 2002. It was also lower than the 6.3 per cent rate of growth recorded in June, and below the 5.8 per cent forecast by economists polled by Reuters. 

Meanwhile, Chinese retail sales grew by 7.6 per cent in July, their weakest rate since April and below the 8.6 per cent growth anticipated by economists polled by Reuters. 

“The broad-based slowdown in activity and spending last month suggests that, after holding up reasonably well in the first half of the year, economic growth now faces renewed downward pressure,” said Julian Evans-Pritchard, an economist at Capital Economics. 

China’s economy grew at its slowest pace in almost three decades in the second quarter, at 6.2 per cent year on year, as trade tensions hit the country’s exports. The two countries have slapped tariffs on billions of dollars of each other’s goods.

The latest evidence of economic weakness will likely prompt speculation that Beijing will turn to fresh easing measures to stimulate growth.

On Tuesday, Washington announced it was delaying additional tariffs on some Chinese goods, raising hopes that the two countries may still be able to reach a resolution on trade. 

A weaker renminbi, which shocked investors when it devalued past the key seven to the dollar mark last week, is unlikely to fully offset any impact from US tariffs and a broader slowdown in the global economy, Mr Evans-Pritchard added.

“We expect a further slowdown in economic activity over the coming year as a result,” he said. 

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