China's industrial output slumps to 17-year low

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Mar 15, 2019 06:00 am

BEIJING: Growth in China's industrial output fell to a 17-year low in the first two months of the year, pointing to further weakness that is likely to trigger more support measures from Beijing.

But a mixed bag of major data yesterday also showed property investment is picking up, while overall retail sales were sluggish but steady, suggesting that the economy is not in the midst of a sharper slowdown at present.

China is ramping up assistance for the economy as this year's growth looks set to plumb 29-year lows, but support measures are taking time to kick in. Most analysts believe activity may not convincingly stabilise until the middle of the year.

Chinese Premier Li Keqiang last week announced billions of dollars in additional tax cuts and infrastructure spending, as officials vowed they would not resort to massive stimulus like in the past, which produced swift recoveries in China and reflationary pulses worldwide.

"The latest data should partially ease concerns about a sharp slowdown at the start of the year. But the near-term outlook still looks downbeat," Capital Economics said in a note.

INFRASTRUCTURE

Capital Economics and others noted that infrastructure investment has not improved as much as hoped after the government began fast-tracking road and rail projects last year, raising the risk of a milder-than-expected bounce in construction when work resumes in warmer weather.