MNI Analysis: China Slowing Consumption Shows Growth Challenge

--Investment, Retail Sales Grow Slower

--Industrial Output Growth Rebounds 

     BEIJING (MNI) - China's major economic indicators for April presented a

mixed reality, with slower gains in consumer spending and investment contrasting

with a stronger industrial output, underpinning challenges policymakers must

overcome to transit to a consumption-based model. 

     Retail sales rose 9.4% y/y, down from 10.1% in March and 10.7% last April,

according to data released Tuesday by the National Bureau of Statistics (NBS).

That fell short of the 10.1% median of 18 economists surveyed by MNI. 

     Auto sales remained dismal, growing at 3.5% y/y in April, the same pace as

March and was lower than last April's 6.8%. 

     With policymakers touting the importance of boosting domestic demand, there

will likely be further introductions of measures to boost retail growth and

counter the impact of a possible slowdown in exports.

     --LESS-THAN-EXPECTED

     Commenting on the less-than-expected result, Liu Aihua, an NBS spokeswoman,

played down the significance of one period's results at a press conference,

stating that the economy's trend is stable in spite of the "fluctuation" of some

indicators. 

     Fixed-asset investment (FAI) increased 7.0% y/y in the first four months,

below 7.4% projected by MNI's survey. It was lower than 7.5% during Jan-Mar 2018

and lower than 8.9% growth for Jan-Apr last year. 

     Infrastructure investment grew 12.4% during Jan-Apr, down from 13.0% during

the first quarter and just about half of the rate of 23.3% Jan-Apr 2017. A

high-base of comparison last year and efforts to regulate public-private

partnerships and local government debts may have caused growth to slow, said

Liu.

     FAI by the private sector rose 8.4% y/y during Jan-Apr, lower than 8.9%

during Jan-Mar period while higher than 6.9% same period last year, reflecting

the positive impacts of governments' measures to encourage private investments.

     --BRIGHTER SPOT

     Industrial output was the brighter spot, gaining 7.0% y/y, up from 6.0% in

March and 6.5% in April, 2017. MNI survey median of 6.5%.

     Production in the electricity, heating, gas, and water production and

supply sector rose 8.8% y/y in April, above the 5.8% growth rate in March and

the 7.8% growth rate last April.

     The faster growth in industrial output is partly resulted from holidays

effects, which cause March production to slow and April production to fasten.

Strong export in April, which grew 12.9% y/y in dollar terms, also contributed

to the rapid growth of industrial output in April. The low base effect last

April caused by the Labor Day holiday also made industrial output growth this

April higher. So confirming industrial output growth to be strong needs more

evidences.

     The national urban unemployment rate was 4.9% in April, down from 5.1% in

March and also lower than 5.0% last April, well below the 5.5% target set by

Premier Li Keqiang at the beginning of this year.

     The ongoing trade spat with the U.S. trade war, which has largely been more

verbal and symbolic, didn't have any impact on April's data, Liu said. 

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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