China’s run of disappointing April data underscore the bind facing policy makers seeking to cut capacity from the worst-performing sectors and curb credit excesses in recovering ones without stalling the economy.
Bloomberg’s monthly gross domestic product tracker shows growth slowed to 6.88 percent in April, from 7.11 percent in March. Weak steel and coal output dragged on industrial production, which increased 6 percent from a year earlier versus economists’ forecasts of 6.5 percent, while retail and investment readings also disappointed, according to reports released on Saturday. A day earlier, data showed a slump in new credit last month.
"Even with substantial stimulus at work, the accumulated problems of high debt and industrial overcapacity mean that the pass-through to stronger activity remains decidedly muted," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. "The fact that only policy-driven sectors (infrastructure and real estate) are doing well is a reminder that stimulus has yet to revive the animal spirits of China’s entrepreneurs."
Reference: Bloomberg
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