China’s industrial output growth slowed to its slowest pace in five months in August and retail sales and new home prices continued to fall, strengthening the case for stronger stimulus measures to boost the economy and help it reach its annual growth target.
Saturday’s slowdown was mirrored by data showing weak bank lending figures on Friday, pointing to a weak pace of third-quarter growth for China’s $18.6 trillion economy, the world’s second-largest after the United States.
Industrial production in August grew 4.5 percent year-on-year, down from a 5.1 percent pace in July and the slowest growth since March, according to data released by the National Bureau of Statistics on Saturday.
Retail sales, a key gauge of consumption, rose just 2.1% in August despite the peak summer travel season, down from a 2.7% gain in July and below the 2.5% growth analysts had forecast.
China’s refinery output also fell for the fifth straight month, and crude steel output in August fell 6.1 percent from July, pointing to weak demand.
The faltering growth in Chinese economic activity has already prompted global brokerages to cut their forecasts for China’s economic growth in 2024 to below the government’s official target of around 5%. The economy grew 4.7% in the second quarter.
President Xi Jinping urged authorities on Thursday to make greater efforts to achieve annual economic growth targets and social development goals, state media reported, amid expectations that more steps will be needed to stimulate a faltering economic recovery.
The long-running debt crisis in China’s key real estate sector, persistent deflationary pressures and high unemployment are among the factors currently weighing on investor confidence.
The office said in a statement that “the adverse effects of the current changes in the external environment are increasing, domestic demand is still insufficient, and the economy is still facing many difficulties and challenges in its ongoing recovery.”
Unemployment approached 5.3% in August, according to official data, compared with 5.2% in July.
Raise the retirement age
The data was released on Saturday, a day after Beijing announced it would raise the retirement age nationwide as the birth rate declines and hundreds of millions of people age.
China’s National People’s Congress has approved a proposal to raise the retirement age, the official Xinhua news agency said, accelerating the process of amending decades-old laws aimed at addressing economic pressures caused by a shrinking workforce.
The retirement age for men will be raised from 60 to 63 years, for women working in office professions from 55 to 58 years, and for women working in manual professions from 50 to 55 years.
The changes are scheduled to take effect on January 1, 2025.
Raising the retirement age would ease pressure on pension budgets at a time when many Chinese provinces are already facing large deficits.
China’s total population is set to decline for the second year in a row in 2023, with experts warning of ramifications for the economy, health and social care systems unless action is taken.
