April industry picks up but investment spending is worse than expected

In April, the industrial growth rate in the Mainland was higher than expected, indicating that the production was steadily increasing. However, the demand declined, investment and consumption were all lower than expected, and the investment growth rate hit a new low in nearly 20 years. According to the National Bureau of Statistics, the economy in the Mainland remains stable, but it recognizes that the trade friction between China and the United States has not fully shown its economic impact.

According to the analysis, in the face of the overall decline in demand, the Mainland economy still has downward pressure in the second half of the year.

Industrial added value rose by 7%

The National Bureau of Statistics announced yesterday that the value added of industries above designated size in China in April increased by 7% year-on-year, an acceleration of 1 percentage point from the previous month. In the first four months of this year, the industrial added value increased by 6.9% year-on-year.

Investment growth slowed down significantly. In the first four months, investment in fixed assets rose by 7% year-on-year, down 0.5% from January to March. The growth rate was the lowest since 1999. Among them, private fixed investment increased by 8.4%. Infrastructure investment growth rate fell to 12.4%.

The investment in real estate remained stable at a high level. In the first four months, real estate development investment increased by 10.3% year-on-year, but the growth rate slowed by 0.1% from the previous March. Other key indicators also fell. From January to April, the sales area of ​​commercial housing fell by 2.3 percentage points to 1.3%, the lowest level in three years, and sales growth fell to 9%.

In terms of consumption, the total retail sales of consumer goods in April rose by 9.4% year-on-year, the lowest level in the year, and the growth rate fell by 0.7% from the previous month.

Investment growth rate is the lowest in nearly 20 years

The analysis pointed out that the start-up of enterprises has gradually resumed, and the production of public utilities such as manufacturing and electricity has recovered, and the industrial growth rate in April has exceeded expectations. Investment growth was mainly dragged down by sluggish infrastructure investment. As local governments strengthened debt management, the PPP project (Public-Private-Partnership) review was tightened, and the willingness to finance expansion also weakened. Affected by deleveraging, private investment also slowed down. Consumption growth rate is lower than expected, and it is related to the decline of auto and real estate consumption. In the first quarter, the per capita disposable income of the country’s residents was lower than the growth rate of GDP, which also restrained consumer demand and even degraded consumption.

Niu Li, director of the Macroeconomic Research Office at the China National Information Center, pointed out that domestic demand was clearly lower than expected, and the economic downward pressure was still there. However, as a whole, China’s economy has maintained its stable tone, and the trend is still within expectations.

Liu Aihua, spokesperson of the National Bureau of Statistics, acknowledged yesterday that in the short-term, the impact of the Sino-US trade negotiations on the economic operation has not yet fully manifested, but there are many uncertainties in the future and the impact needs to be observed. However, she also pointed out that regardless of fundamentals or mid-to-long term, the next phase of China’s economy is fully capable and conditional to maintain a steady and positive development.