(Bloomberg) -- China’s economy slowed further in October, signaling that policy makers’ piecemeal stimulus is failing to boost output and investment amid ongoing trade tensions with the U.S. and subdued domestic demand.
- Industrial output rose 4.7% from a year earlier, versus a median estimate of 5.4%. Retail sales expanded 7.2%, compared to a projected 7.8% increase.
- Fixed-asset investment slowed to 5.2% in the first ten months, versus a forecast 5.4%. That was the lowest reading in comparable data back to 1998.
- The government announced a reduction in capital requirements for some infrastructure projects on Wednesday, just hours before the data was released, signaling ongoing concern about the level of investment
- The data form further evidence that policy makers’ efforts to brake the slowdown in the economy are falling behind the curve, as the nation faces structural downward forces at home and the uncertainty clouding the trade outlook with the U.S.
- “The data reinforce the theme of economic slowdown,” according to Raymond Yeung, chief economist for greater China with Australia & New Zealand Banking Group. “The poor IP confirms our view that an industrial recession is underway,” and a phase one deal trade deal will not help as the slowdown is more to do with lack of domestic demand, he said
- The People’s Bank of China reduced the cost of 1-year funds for banks for the first time since 2016 earlier this month, reflecting the struggle to support the economy when debt and consumer prices are rising but demand remains weak
- China’s Ministry of Commerce and some U.S. officials last week said they agreed to roll back some tariffs if there is a phase-one deal. But the optimism was quickly damped as President Donald Trump said Friday that he hasn’t agreed to anything. The trade war has lasted more than a year and already hurt the global economy and any re-escalation could further hit investor sentiment.
- The divergence between state- and private-sector fixed asset investment continued to worsen, as private investment growth slowed to the lowest since 2016
- NBS spokeswoman Liu Aihua said at a briefing after the data in Beijing that while the challenges facing the economy shouldn’t be underestimated, the overall momentum of the economy hasn’t changed
