Economic Watch: Chinese economy resilient as reform sustains growth

Source: Xinhua| 2018-06-14 19:16:41|Editor: ZX
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BEIJING, June 14 (Xinhua) -- China's economic activity continued steady expansion last month thanks to resilient industrial output and manufacturing investment, official data showed Thursday.

Industrial output expanded 6.8 percent year-on-year in May, slower than the 7-percent rise the previous month but still faster than the 6-percent increase in March, the National Bureau of Statistics said in a statement.

In the first five months, industrial output rose 6.9 percent year-on-year, flat with the January-April period.

NBS spokesperson Mao Shengyong said the country's supply side structural reform had prompted robust emerging sectors and sustained growth in the broader economy at a press conference.

High-tech and equipment manufacturing sectors substantially outpaced last month's industrial average, with production of new energy vehicles, integrated circuits and robots up 56.7 percent, 17.2 percent and 35.1 percent, respectively.

Heavy industries continued to be downsized, and the business debt-to-asset ratio was reduced. Combined profits of industrial companies saw faster growth in the January-April period.

The service sector picked up pace, with its production index up 8.1 percent last month, quickening from 8 percent in April. Software, information technology and business services were all up.

Fixed-asset investment by the private sector climbed 8.1 percent year-on-year in January-May, up 1.3 percentage points from the growth in the same period last year. Investment in manufacturing grew 5.2 percent in the first five months, up from 4.8 percent for January-April.

"The Chinese economy maintained its trend of steady development," Mao said, adding that the economy had the conditions to maintain sound momentum in the second half of the year and deliver its 6.5-percent growth target in 2018.

Stable factory activity largely offset lagging infrastructure investment and slower growth in retail sales.

Infrastructure investment, which used to be a major economic stabilizer, rose 9.4 percent in the first five months, slower than the 12.4-percent increase in the January-April period. Retail sales growth dropped 8.5 percent in May, the second straight decline.

Analysts believe major indicators still remained solid despite retreats from booming increases, pointing to continued strength in the broader economy.

"Monthly data suggests year-on-year growth will hold up well in the second quarter, with export performance and industrial production strengthening, retail sales resilient and property investment holding up better than expected," Fitch Ratings said in a report.

The rating agency has upgraded its forecast for China's GDP growth this year to 6.6 percent from 6.5 percent due to "better-than-expected recent momentum."

Earlier data showed China's economy expanded 6.8 percent year-on-year at comparable prices in the first three months.

When answering questions, Mao said the impact of the U.S. interest rate hike on the economy would be limited and China's new measures to increase imports would not affect growth.

Despite competitive tax reductions and escalating trade friction in the world, Mao expects the global economic recovery to continue and trade to also increase, which is expected to form a favorable environment for the Chinese economy.

But the spokesperson still noted increasing uncertainties in the external environment and lingering domestic imbalances, adding that more efforts were required to reinforce the economic foundation.

Fitch predicted a slowdown in later 2018 due to a weakening in credit growth, sluggish housing sales and an ongoing deceleration in broader investment.