Rate cuts expected soon as China’s slowdown worsens
BEIJING: The slowdown in China's economy deepened in August, with industrial production growing at its weakest pace in 171/2 years.
Retail sales and investment gauges also worsened, data yesterday showed, reinforcing views that China is likely to cut some of its key interest rates this week for the first time in over three years to prevent a sharper slump in activity.
WEAKENING GROWTH
Industrial output growth unexpectedly weakened to 4.4 per cent last month from the same period a year earlier, the slowest pace since February 2002 and receding from 4.8 per cent in July.
Analysts polled by Reuters had forecast a pickup to 5.2 per cent.
In particular, the value of delivered industrial exports fell 4.3 per cent on-year, the first monthly decline in at least two years, highlighting the growing toll on Chinese manufacturers from the escalating Sino-US trade war.
Traders expect a cut in the central bank's medium-term loan facility rate as early as today, which would open the way for a reduction in the new loan prime benchmark rate later in the week.
But room for stimulus is believed to be limited by worries about rising debt risks, with policy easing by the People's Bank of China expected to be more restrained than the US Federal Reserve or European Central Bank. - REUTERS
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