BEIJING – The pace of growth in China’s economy slowed further in August, indicating that current stimulus policies may not be enough to shield the economy from the worsening effects of the trade war with the U.S.
Industrial output rose 4.4 percent from a year earlier, versus a median estimate of 5.2 percent. Retail sales expanded 7.5 percent, compared to a projected 7.9 percent increase. Fixed-asset investment slowed to 5.5 percent in the first eight months, versus a forecast 5.7 percent.
The industrial output reading was the lowest single-month figure since 2002, with only a combined Jan-Feb result in 2009 dipping lower. China merges some statistics due to the Lunar New Year holiday.
The data form further evidence that policy makers’ efforts to brake the slowdown in the economy are falling behind, as the nation faces structural downward forces at home and the likelihood of yet-higher tariffs on exports to the U.S.
The People’s Bank of China cut the amount of cash banks must hold as reserves this month to the lowest level since 2007, though is still holding off on cutting borrowing costs more broadly.
Negotiators from China and the U.S. plan to have two rounds of face-to-face negotiations in coming weeks. Both sides have taken steps to show goodwill, and U.S. officials are considering an interim deal to delay tariffs with China, people familiar with the matter have said.
“The low retail sales is particularly worrying,” said Raymond Yeung, chief Greater China economist at Australia & New Zealand Banking Group Ltd. “To stabilize growth, the next few months will see more aggressive policy efforts.”