China's economy showed further signs of strain in July with output at its factories falling to its lowest level in 17 years, while investment and retail sales also slowed, official data showed Wednesday.

The figures are the latest to highlight how the world's second-largest economy is being battered by an escalating trade war with the United States and weak global demand.

Industrial output increased 4.8 percent on-year in July, down from 6.3 percent in June and marking the weakest pace since 2002.

It was also well below the 6.0 percent forecast by economists in a Bloomberg News survey.

"Given the complicated and grave external environment and the mounting downward pressure on the economy at home, the foundation for sustainable and healthy growth of the economy still needs to be consolidated," said Liu Aihua, a spokeswoman for the National Bureau of Statistics, which released the data.

The data also suggested China's billion-strong army of consumers were showing signs of increasing thriftiness.

Retail sales -- which have long been a bright spot for the economy -- rose 7.6 percent last month, sharply down from 9.8 percent in June.

- 'Economic conditions worsened' -

Liu attributed the weaker July numbers to a reversal in car sales as consumers snapped up cut-rate autos in June ahead of new emissions standards -- and claimed retail sales were normal after factoring out the impact.

But Julian Evans-Pritchard, an analyst at Capital Economics, said the reversal only partly explained the slowdown.

The new figures highlight the battle Beijing has in trying to navigate the country's economy from exports and credit-fuelled investment to one driven by domestic consumption.

The unemployment rate notched upwards to 5.3 percent in July from 5.1 percent in June.

Fixed-asset investment was up 5.7 percent in January-July, slowing from 5.8 percent in January-June. Spending on highways, high-speed trains and airports rose 3.8 percent, down from years of near 20 percent increases.

"Economic conditions worsened across the board last month," said Evans-Pritchard.

Growth of China's electricity generation sector slowed to 0.6 percent on-year in July, down from 2.8 percent growth in June, Lu Ting of Nomura bank said.

"The previous period with close to zero power production was mid-2014 to mid-2016 when the Chinese economy significantly slowed," Lu told AFP. "It's not a good sign."

- 'Wake-up call' -

China's gross domestic product growth slowed to 6.2 percent in the second quarter of the year -- the weakest pace in almost three decades.

The economic malaise makes it more difficult for President Xi Jinping to fight back forcefully against Washington, which is using tariffs as leverage to try to force Beijing into opening up its markets.

Chinese exporters and US retailers did get a boost Tuesday as President Donald Trump's administration announced it was delaying tariffs on key consumer electronic goods imported from China, which had been slated for a 10 percent duty on September 1.

News that top US and Chinese trade officials spoke by telephone early Tuesday offered further signs of a possible letup in the trade war that had been escalating in recent weeks.

"It doesn't really change the outlook on the trade tensions," said Louis Kuijs of Oxford Economics, noting "a US-China trade deal remains unlikely any time soon."

"Meanwhile, rising tariffs and high uncertainty will take their toll on China's exports and investment," Kuijs said in a note.

China's central bank last week allowed the yuan currency to fall below seven to the dollar for the first time in more than a decade, helping make 'Made in China' products cheaper around the world.

But markets have been waiting for more stimulus from Beijing and further monetary easing to boost the flagging economy.

Surveying the latest data, Stephen Innes, managing partner at VM Markets said: "If this isn't a wake-up call to the (People's Bank of China), I'm not sure what is."

lld-rwm/rox/dan

BANK OF CHINA

NOMURA HOLDINGS

Related Links
Global Trade News

Tweet

Thanks for being here; We need your help. The SpaceDaily news network continues to grow but revenues have never been harder to maintain. With the rise of Ad Blockers, and Facebook - our traditional revenue sources via quality network advertising continues to decline. And unlike so many other news sites, we don't have a paywall - with those annoying usernames and passwords. Our news coverage takes time and effort to publish 365 days a year. If you find our news sites informative and useful then please consider becoming a regular supporter or for now make a one off contribution.
SpaceDaily Contributor $5 Billed Once credit card or paypal		SpaceDaily Monthly Supporter $5 Billed Monthly paypal only

China factory price deflates as demand weakens
Beijing (AFP) Aug 9, 2019
Chinese factory price inflation fell below zero for the first time in three years, official data showed Friday, the latest sign of weakening demand amid mounting trade tensions with the US. The producer price index (PPI) - an important barometer of the industrial sector that measures the cost of goods at the factory gate - dropped 0.3 percent year-on-year in July, down from zero percent in June, according to the National Bureau of Statistics (NBS). A slowdown in factory gate inflation reflects ... read more