China slowing down? - UOB

Analysts at UOB Group explained that China’s industrial production, retail sales, investment grew at a slower pace in April, continuing a similar trend seen in the trade sector, as well as economic numbers amongst its larger trading partners. 

Key Quotes:

"Retail sales grew 10.7% y/y in April, slowing from a rise of 10.9% y/y in March, as well as consensus estimates of a 10.8% y/y growth rate. The softening was particularly pronounced at larger enterprises, where sales growth dropped to 9.2% y/y from a pace of 10% y/y in March. Online sales growth for the year to date accelerated marginally to 25.9% y/y, compared to growth of 10.2% y/y in total retail sales year to date. Urban fixed asset investment grew 8.9% y/y in April, down from growth of 9.2% y/y a month ago, as well as expectations of a 9.1% y/y increase. 

China’s National Bureau of Statistics said that public-sector investment growth increased slightly for the year to 13.8% y/y, although it was offset by a slowdown in private sector investment of a 6.9% y/y growth, from 7.7% y/y in Q1 2017. That discrepancy between private and public sector growth is likely due in part to measures introduced by the state to curb risky lending. 

Chief among those has been a rise in the inter-bank lending rate to decrease cheap sources of funding for small banks that don’t have state backing. The slowdown in April comes off the back of a strong Q1 for the Chinese economy, when it reported growth of 6.9% — its highest figures in six quarters, prompting many to think that it would not be matched in 2Q 2017. Yesterday’s economic numbers came as China introduced its global Belt and Road trade initiative to an audience of 29 countries on the weekend."