China factory output and retail sales slump, intensifying need for increased stimulus efforts
China’s industrial output growth slowed to a five-month low in August, while retail sales and new home prices weakened further, pointing to the need for aggressive stimulus to boost the economy and achieve the annual growth target. Data released on Saturday showed that industrial output expanded by 4.5% year-on-year in August, the slowest growth since March. Retail sales rose only 2.1% in August, falling short of expectations.
Analysts are concerned about the weak growth momentum in the $18.6 trillion economy, with soft bank lending figures adding to the concerns. President Xi Jinping has urged authorities to work towards achieving the country’s economic goals amidst expectations for more stimulus measures.
The property sector remains a drag on growth, with new home prices falling at the fastest pace in over nine years. To boost the housing market, China may consider cutting Interest rates on outstanding mortgages. However, analysts believe more aggressive steps are needed to support debt-laden developers and potential home buyers.
While exports have been a bright spot for China, rising tensions with some countries and regions raise concerns about the sustainability of this trend. Overall, investors are shifting focus to the outlook for 2025 and questioning whether China’s fiscal policy will remain tight amidst global economic slowdowns.
In conclusion, China’s economy faces challenges that require bold stimulus measures to support growth and consumer spending while navigating the uncertain global economic landscape.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.