China Shows Signs of Slowing Economic Growth

Forex News

The Central Bank of China raised concerns about the state of the economy today, when it left short-term interest rates unchanged. This step of the People's Bank of China (PBOC) surprised the markets, which expected that it would raise interest rates after the US Federal Reserve.

Economic data for May showed that the economy of China is losing momentum. Industrial production, investment and retail sales all grew less than expected.

The National Bureau of Statistics of China reported that China’s industrial output grew by 6.8% yoy in May, less than April's 7% growth. Retail sales rose by 8.5% in May from 9.4% in April. This is also the slowest pace since June 2003. Analysts had expected a 9.6% growth. China's fixed-asset investment growth slowed to 6.1% in Q1 from the same period a year earlier (the slowest pace since at least February 1996). Analysts had expected investment growth to remain steady at 7.0%.

Growth in infrastructure spending slowed to 9.4% in the first five months, compared with a rise of 12.4% in January-April. Property investment growth slowed to 9.8% in May from 10.2% in April. Private sector investment, which accounts for about 60% of overall investment in China, slowed to 8.1% in January-May versus 8.4% in the first four months.

China's economic growth rate is expected to be 6.6% in 2018, as revealed by the latest investigation of the Chinese Academy of Social Sciences (CASS). Meanwhile, the Chinese GDP is forecast to expand by around 6.7% in the second quarter from a year earlier.