Chinese investments grew in the first seven months of this year at the slowest pace since 1996, and in July, retail sales growth also slowed, adding to signs of weakening Chinese economic momentum, according to official data released on Tuesday, Reuters reports.
>>>Chinese Exports Rise Despite U.S. Tariffs, U.S. Prepares List of New Tariffs
According to data from the Chinese National Bureau of Statistics, industrial production in July increased by 6.0 percent year-on-year, the same pace as in June.
Retail sales, a key indicator of domestic consumption, rose by 8.8 percent, following a 9.0 percent increase in June.
In the first seven months of this year, fixed asset investment increased by only 5.5 percent, the weakest since this indicator began to be tracked in 1996.
“In the coming months, we expect new risks that could slow economic growth, as credit growth continues to decelerate,” estimates Capital Economics analyst Julian Evans-Pritchard.
The Chinese government indicated in July that it would strengthen support for the economy, with officials announcing an expedited process for issuing permits for infrastructure projects in the second half of the year.
The International Monetary Fund (IMF) suggested to Beijing to refrain from a new cycle of aggressive stimulus measures for the economy, fearing it would further exacerbate the problem of excessive debt.
Capital Economics analysts estimate that the effects of stimulus measures may not be felt for several months.
>>>Nigeria Accepts Chinese Yuan as Reserve Currency
Ting Lu, chief economist for China at Japanese investment bank Nomura, agrees with him.
“The situation in the Chinese economy will worsen before it improves. It will take several months to change the trend. To ensure recovery, Beijing will accelerate the process of easing credit conditions and fiscal measures and prevent financial problems, such as frequent defaults on maturing bonds,” estimates Lu.
The Chinese economy slowed in the second quarter to 6.7 percent, down from 6.8 percent in the first quarter.
Beijing is undertaking the delicate task of rebalancing its economic model, shifting from investment and exports towards personal consumption, amid a serious problem of massive debt.
These difficulties have been compounded by the trade conflict with Washington, which has pressured the value of the Chinese yuan and stock prices in recent weeks, providing relief to exporters but simultaneously hindering consumers.
U.S. tariffs on imports of Chinese goods worth $34 billion and retaliatory tariffs from Beijing came into effect in early July, with a new package expected to be introduced next week.
It is still unclear to what extent the trade conflict has affected China, said Liu Aihua, spokesperson for the Chinese National Bureau of Statistics.
>>>Google Launches Censored Search Engine for China
“The negative impact will develop gradually while the effects on the international and global economy are already visible,” Liu said.
