The rally in China’s old economy is slowing after just three months.
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Fixed asset investment rose 9.6 per cent in the first five months of the year compared to the same period last year – a 0.6 per cent drop over the growth recorded between January and April. Analysts had forecast they would rise 10.1 percent, the same pace as in April.
Value-added industrial output, one of the leading indicators for economic growth, rose 6 percent year on year in May, unchanged from April and in line with expectations.
“But we must be aware that the global environment remains complicated and severe, the painful domestic structural adjustments continue, and the economy is still under downward pressure”.
Online sales in the first five months rose 27.7 percent year on year.
Though industrial production in the economic powerhouse this month appears to be stable, slackening private sector investment has raised concerns about the medium-term prospects, according to economic research company Capital Economics.
The Statistics Bureau blamed the slowdown on private firms’ difficulties in accessing credit and regulatory barriers to entry in many sectors.
Following Monday’s release, analysts said that this month’s overall figures may endanger China’s growth target of 6.5 to 7 percent in the second quarter. “The government will likely launch more fiscal policies such as faster approval of infrastructure projects as downside risk to growth heightens”, said Raymond Yeung of ANZ in a note.
But figures on urban investment also out on Monday showed 9.6% year-on-year growth in May, below expectations for a 10.5% growth rate, raising doubts about whether the economy is gaining traction. The output of the hi-tech and equipment manufacturing industries maintained strong growth, rising 11.5 percent and 8.5 percent in May.
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Chinese stocks were sharply lower, with the benchmark Shanghai Composite Index falling 2.4 percent in late trade.
