HONG KONG — A closely-watched batch of data from China, released on Friday, showed that its economy appears to have stabilized in July – helping to dispel some of the concerns about cooling growth in the world’s second-largest economy.
Industrial output grew 9.7 percent from a year earlier – a sharp-pickup from the pace recorded in recent months, the National Bureau of Statistics reported. The figure easily beat expectations for a rise of 9 percent, and helped support tentative signs, from a government purchasing managers index released last week, that conditions in the country’s manufacturing sector are starting to see a modest improvement.
Other data released on Friday also showed some stabilization.
Retail sales grew 13.2 percent — slightly less than the 13.5 percent that analysts polled by Reuters had expected, but nearly unchanged from June, when the figure came in at 13.3 percent.
And fixed-asset investment in urban areas also came were in line with expectations, growing 20.1 percent in the first seven months of this year.
Together, the data made for encouraging reading: growth appears, for now at least, to no longer be cooling as firming demand in the West and a steady drip of small-scale, targeted stimulus measures gain traction.
“The better-than-expected July activity data has largely dampened the concern of a hard landing of China’s economy,” economists at Australia & New Zealand Banking Group wrote in a note. “We believe that the 7.5 percent growth target is more likely to be attainable,” the added, referring to the government’s target for growth this year.
On the other hand, China is not about to return to the heady days of double-digit expansion it enjoyed before the global financial crisis, and the country faces major challenges at a time when policy makers in Beijing are trying to engineer a major overhaul of the economy.
Inflation data also released on Friday underlined that point. Consumer price inflation remained muted in July, at 2.7 percent. But the price of goods as they leave the factory gate has been falling for more than a year – the decline in July was 2.3 percent – a sign, analysts said, of the persistent overcapacities that beset many sectors.
New Data Suggest Stabilizing Chinese Economy
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