InvestmentsMar 11 2015

Growth falls across sectors as China’s issues deepen

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Growth falls across sectors as China’s issues deepen

Disappointing Chinese economic data has raised further fears of a slowdown in the world’s second-largest economy, in spite of efforts from the government to stimulate demand.

China has been attempting to stave of a decline in growth through monetary easing measures such as cutting its interest rate, but data released today has shown that growth is falling faster than expected across several sectors of the economy.

Data from the National Bureau of Statistics showed Chinese retail sales in January and February - China's data combines the first two months of the year - grew by 10.7 per cent compared to the same period in 2014.

Although the sales growth was high, it was below expectations of a 11.6 per cent rise and below the 11.9 per cent growth seen in December.

Fixed asset investment in China also saw a shock decline in growth, falling from 15.7 per cent in December to 13.9 per cent in January and Febuary, whereas the expectation had been for 15 per cent growth.

Meanwhile, output from the industrial sector grew by 6.8 per cent, which was also much lower than December’s growth of 8.3 per cent and expectations of 7.7 per cent.

There were also declines in the rate of real estate investment and in the number of commercial buildings sold, continuing the decline in China’s property market.

Maarten-Jan Bakkum, multi-asset strategist at ING Investment Management, said real estate growth was China’s “weakest link” and he forecast that the government would embark on further measures in the coming months to stimulate demand in that area following the weak data.

The disappointing figures from across several sectors comes after the Chinese government last week reduced its forecast for 2015 economic growth to 7 per cent from the previous target of 7.5 per cent.