China retail sales lead business activity weakness, survey finds

Slowing retail sales stand out as the primary drag on the mainland's economic growth so far this year, while activity in almost every other business sector sagged, the latest quarterly China Beige Book survey found.

But signs of stability in the availability of credit and growth in new domestic and export orders for the massive factory sector were indications that a further deterioration in the economy might be averted.

"The pace of Chinese economic expansion has plainly slowed," Leland Miller, president of survey publisher CBB International, said in a statement accompanying the results. "There is certainly gloom, but also perhaps a bit of light."

The fall-off in retail extended far beyond luxury goods, hurt by the government's nationwide corruption crackdown, and only firms in the transport sector reported better revenues in the first quarter of this year than in the fourth quarter of last year.

Gains in retail revenues were reported by just 54 per cent of survey respondents, down from 61 per cent in the fourth quarter and 73 per cent a year ago. Retail sales over the Lunar New Year period were the weakest in at least three years.

Revenues, sales, profits and wages were all weaker than a year ago for firms surveyed in one of the most comprehensive nationwide polls of business conditions in the world's second-biggest economy.

Tightening credit that had been a problem in previous quarters stabilised, but access to finance for firms was only slightly better than the nine-quarter low in the fourth quarter.