China’s economic momentum weakens amid coronavirus controls and property curbs

Weak economic data last month points to a worsening slowdown in the Chinese economy, with some analysts saying policymakers may loosen liquidity

The impact of Delta outbreaks on consumer spending – especially in the services sector – was acute in August and further contractions could be on the way

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There are growing signs of a worsening slowdown in the Chinese economy. Photo: AFP

Published: 8:55pm, 15 Sep 2021Updated: 8:55pm, 15 Sep 2021

China is increasingly likely to loosen some liquidity conditions as weak economic data released on Wednesday cast a pall over the world’s second largest economy and fresh coronavirus outbreaks add to concern about a slowdown, economists said.

Retail sales growth slumped in August to 2.5 per cent, far lower than the 7 per cent estimate in a Bloomberg survey of analysts and an 8.5 per cent increase in July, data from the National Bureau of Statistics (NBS) showed.

Industrial production was also slightly below expectations, growing at 5.3 per cent year on year and slower than the 6.4 per cent gain in July. Fixed-asset investment in the January-August period rose 8.9 per cent compared with a year earlier, below estimates of 9 per cent.

The data is the latest indication of a worsening slowdown in the Chinese economy, with some analysts saying policymakers may adjust their macro stance to maintain economic growth, especially in the face of headwinds from Delta variant outbreaks and restrictions on the property sector.

Industrial production and investment rose from a high base last month, but growth rates adjusted for pandemic-related distortions were weak, reflecting soft domestic demand, the effect of property curbs and elevated commodity inflation, economists warned.