Chinese economy cools in April as Beijing tries to rein in property and credit boom
China’s economy has shown more signs of cooling with key barometers from its manufacturing and services sectors dipping in April. The latest data comes as Beijing attempts to rein in a booming property market and rapid credit growth.
Two surveys on Sunday suggested activity in the world’s second largest economy eased back in April. Manufacturing slowed more than expected as demand was hit by government moves to curb risks associated with a run of high borrowing in China.
The National Bureau of Statistics’ official purchasing managers’ index (PMI) of factory activity fell to a six-month low of 51.2 in April from a multi-year high of 51.8 in March. That was above the 50-mark separating growth from contraction but missed forecasts for a reading of 51.6 in a poll of economists by Reuters.
China’s official PMI report on its services sector also signalled a slowdown in April. That index slipped to 54.0 from 55.1 in March, showing the sector was still expanding at a solid pace as rising living standards continue to buoy consumer spending.
The Chinese economy has defied expectations over the first three months of 2017, with GDP growing 6.9%, but economists expect the pace of expansion to ease during the rest of the year as the government continues its efforts to shift from an economic model based on debt-fuelled investment and exports towards a consumer-driven one.
Economists are hopeful that the news on growth will remain positive enough so that Chinese authorities are not tempted to ease back on the pace of reform or reach for once-favoured ways of propping up the economy, such as spending on big infrastructure projects and relying on the booming property market.
“A steady flow of solid economic data will only reinforce expectations the Chinese authorities can afford to focus their efforts on reducing financial imbalances in the economy rather than supporting the growth rate of the economy itself,” Victoria Clarke, an economist at the bank Investec, said in a research note ahead of the PMI reports.