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China’s industrial production grew 8.8 percent year-on-year in May, easing back from 9.8 percent in April, the National Bureau of Statistics reported last week.
The slowing pace matched the median expectation of economists the Wall Street Journal had surveyed.
May’s factory output still was 13.6 percent greater than it was in May 2019, when China’s economy was beginning to slump.
However, China’s consumers are still holding tight to their money.
May’s retail spending increased 12.4 percent from a year earlier, but sharply off April’s 12-month growth rate of 17.7 percent.
May’s figure also disappointed economists’ expectation of a 13.6-percent gain.
China’s economy continues to be pulled along by the world’s demand for its factories’ products, while domestic consumer spending is failing to respond to government encouragement as officials seek a healthier balance between consumer spending and factory production.
China has reimposed social distancing mandates in some regions as the COVID virus reappeared, crimping shopping, the WSJ reported.
Also, bottlenecks at the ports in Guangdong province, which handle a quarter of China’s exports and account for 10 percent of its GDP, weighed on the economy last month. (See “COVID Outbreak at Chinese Port Threatens Global Trade”, Trends Journal, 15 June, 2021.)
China’s key unemployment rate dropped in May for the third consecutive month, reaching 5.0 percent, a two-year low.
PUBLISHER’S NOTE: China’s slower growth resulted from shortages of key materials, supply-chain bottlenecks, lingering virus outbreaks that pinched economies in some hotspots around the world, and its weak consumer economy, not from permanent structural problems.
Thus, we maintain our forecast for their economy to grow by 8 percent this year.