Worst may be over for China economy as stimulus kicks in
Weakness in property offset by strong infrastructure investment and more robust retail sales, indicating initial success in policy fine-tuning
The mainland economy may bottom out over next few months, thanks to Beijing's fine-tuning policy, as industrial production and consumption gathered steam last month and accelerated investment in infrastructure offset a deeper slide in the property market.
Economists expect Beijing to roll out more mini-stimulus measures, on the top of the recent moderate easing of money supply, in a bid to hold economic growth above the central government's bottom line, which is believed to be somewhere below but close to the annual target of about 7.5 per cent.
Industrial production grew 8.8 per cent year on year last month, slightly faster than April's 8.7 per cent, the National Bureau of Statistics said yesterday. Power generation rose 5.9 per cent, accelerating from April's 4.4 per cent.
But the property market remained a major drag on economic recovery, with investment in the sector growing 14.7 per cent year on year in the first five months of the year, down from the 16.4 per cent growth between January and April.
We expect the government to continue with the approach it has followed
Home sales value in the first five months dropped 10.2 per cent, while sales of office building units fell 14 per cent.
However, the weakness in the real estate sector was offset by strong infrastructure investment, which climbed 25 per cent in the first five months from a year earlier, accelerating from a 22.8 per cent increase from January to April.