China retail sales growth slowed to 10.0 percent on-year in October, government data showed today, missing expectations in a worrying sign for domestic demand in the world’s second-largest economy.
October’s industrial output growth matched the previous month’s figure at 6.1 percent, the National Bureau of Statistics (NBS) said, also slightly below forecasts in a Bloomberg News survey of economists.
China is a key driver of the world economy but its expansion has slowed significantly from the double-digit years of the past.
Now Beijing is seeking to make a difficult transition away from dependence on exports and heavy industry toward consumption as the key driver of the economy, but the process is proving bumpy.
“It could be the consumer participation in growth is declining,” said independent Hong Kong-based analyst Andrew Collier. “It’s harder for the government to control retail sales than (fixed-asset investment) or industrial production, which is heavily state-driven.”
Beijing has ramped up fiscal stimulus and loose credit to keep the economy on target to meet its 6.5 to 7 percent growth target for the year.
Fixed-asset investment, a gauge of infrastructure spending, rose 8.3 percent in the first ten months of the year.
The NBS figures showed an October jump in real-estate investment, which grew 6.6 percent in the first 10 months, compared with 2.0 percent in the same period last year.
“Growth momentum likely got help from steady property investment in October,” said Zhao Yang of Nomura in a note.
But concerns about surging housing prices caused authorities to roll out cooling measures in major cities last month, which will slowly take effect and lead to a moderate growth slowdown next year, he added.
The factory output figures — which showed accelerating growth in output of steel, glass and cement last month — reflected an increase in investment spending, said Julian Evans-Pritchard of Capital Economics.
“Although state-sector investment remains strongest, much of the recent recovery has come from a marked rebound in private investment, which had stagnated earlier this year,” he said, adding that recent policies to rein in credit growth and the hot property market will cause the economy to “fizzle out” early next year.
Investors were unfazed by the data as Chinese stocks ended the morning session slightly higher Monday.
NBS spokesman Mao Shengyong said the slowdown in consumption growth was due mainly to a higher base of comparison last year as automobile sales surged thanks to government tax cuts.