BOFIT Viikkokatsaus / BOFIT Weekly 2019/20

China National Bureau of Statistics figures show that real industrial output grew by 5.4 % y-o-y last month, a drop of three percentage points from March. Real growth in retail sales slowed to 5.1 % y-o-y. Official real growth in retail sales was last this low in May 2003.

The ongoing slump in car sales depressed figures for both industrial output and retail sales. Carmakers reported that passenger car production fell by 17 % y-o-y in April, while car sales were down by 18 %.

From the standpoint of Chinese economic growth, the tracking of core investment trends is difficult with the available statistical data. The NBS, however, reports that fixed asset investment (FAI) growth in urban areas reached 6.1 % y-o-y in the first four months of this year. Prices of investment goods rose by more than 3 % in the same period, suggesting that real investment growth undershot official growth targets.

The weak economic figures and heating up of the trade war have increased speculations on further stimulus. On Wednesday (May 15), the People’s Bank of China lowered the deposit reserve requirement for rural commercial banks to 8 % to help increase lending and spur growth.