Newspaper article International Herald Tribune

Data Point to Recovery in Chinese Economy, but Slower Growth Lies Ahead

Newspaper article International Herald Tribune

Data Point to Recovery in Chinese Economy, but Slower Growth Lies Ahead

Article excerpt

Factory activity and retail sales picked up a notch in April, but analysts said expansion remains weak as the Chinese economy undergoes a long-term transition.

Chinese factory activity and retail sales picked up a notch in April, according to data released Monday, regaining some steam from weak showings the previous month. But expansion remained underwhelming, analysts said, and underlined the fact that the once red-hot Chinese economy is in the throes of a long-term transition toward slower growth.

Industrial output, the National Bureau of Statistics said, expanded 9.3 percent from April of last year, compared with the 8.9 percent reading in March, while retail sales grew 12.8 percent, compared with 12.6 percent in March. Analysts cautioned that the improvements did not represent a substantive pickup in growth and that the momentum in the Chinese economy remained muted.

Fixed-asset investment, an important engine of economic growth, grew 20.6 percent in the first four months of the year, but the figure was lower than analysts had forecast.

"This is not the start of a rally, it is a sputtering whimper as momentum continues to fade," Xianfang Ren and Alistair Thornton, economists at IHS Global Insight in Beijing, said in a research note.

Although they stressed that "fading momentum is not the same as collapsing growth" and that the government was likely to be able to engineer full-year gross domestic product growth of more than 7.5 percent this year, they added, "we feel the risks remain firmly on the downside."

The data suggest that the Chinese economy is stabilizing, Helen Qiao, chief economist for greater China at Morgan Stanley, said at a news briefing. But "the question remains whether the growth recovery is sustainable or not," and how long the current softness would last.

The figures released Monday were the latest in a series of disappointing indicators from the Chinese economy in recent weeks. Data released last month showed that the economy had expanded 7.7 percent in the January-to-March quarter, compared with the same period last year -- less than the 8 percent that analysts had expected. …

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