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Reuters

Growth in mainland investment and factory output missed forecasts in August, pointing to a further cooling in the world's second-largest economy that will likely prompt the government to roll out more support measures.
The downbeat data came on the heels of weak trade and inflation readings, raising the chances that third-quarter economic growth may dip below 7 per cent for the first time since the global crisis.
"The pace of slowdown in fixed-asset investment is relatively fast - dragged by the property sector, while the factory sector remains sluggish," said Zhou Hao, senior economist at Commerzbank in Singapore.
"Overall, the economy is very weak and the central bank may have to continue cutting interest rates and banks' reserve requirement," Zhou said.
He added that growth was very likely to dip below 7 per cent in the July-September quarter.
August power output was up just 1 per cent year-on-year, and production of key industrial commodities such as steel and coal weakened.
Growth in fixed-asset investment, one of the crucial drivers of the economy, slowed to 10.9 per cent in the first eight months of the year - the weakest pace in nearly 15 years, data from the National Bureau of Statistics showed on Sunday.
Factory output also was weaker than expected, rising 6.1 per cent in August from a year earlier. Markets had expected a 6.4 per cent increase, compared with July's 6.0 per cent.
Crude steel output fell 3.5 per cent year-on-year to 66.94 million tonnes in August, the second consecutive monthly decline, which also triggered a 6.6 per cent drop during the month in the output of coking coal, a key steel-making material.
Raw coal output, which has been falling as a result of government measures to promote cleaner burning fuels, also dropped 2.6 per cent from the same month a year ago, according to data from the bureau.
Annual growth in real estate investment also continued to cool, slowing to 3.5 per cent in the first eight months, the weakest since early 2009, from 4.3 per cent in January-July.
Sales of earth excavators fell 33 per cent in August from a year earlier, hitting heavy machinery makers such as China's Sany and US heavyweight Caterpillar, Bank of America Merrill Lynch said in a note last week.
"The property sector is the biggest drag on China's economy," said Yu Pingkang, chief economist at Huatai Securities in Shenzhen.
"A pick-up in infrastructure investment is insufficient to offset the slowdown in property investment."
Yu has pencilled in 6.9 per cent growth for the third quarter.
Retail sales were the lone positive surprise, growing 10.8 per cent in August from a year earlier, above forecasts of 10.5 per cent, the same as July.
Beijing's surprise yuan devaluation last month and a plunge in its stock markets since June have fuelled fears of more shocks to the economy, although Premier Li Keqiang last week brushed off concerns it was facing a hard landing.
Most analysts agree the economy is likely facing a prolonged but gradual slowdown, rather than a sharp loss of momentum.
The central bank has cut interest rates five times since November and repeatedly relaxed banks' reserve requirements in a bid to put a floor beneath the sputtering economy.
Further policy easing is widely expected in coming months, and the government is also trying to boost investment in infrastructure projects to support growth.


China's factory output and fixed-asset investment growth in August fail to meet forecasts

Fixed-asset investment growth has slowed. Photo: Reuters

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China

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China Economy

Data raises prospects that third-quarter economic growth will dip below 7 per cent
