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By
Kevin Yao and Stella Qiu
BEIJING (Reuters) - Growth in China's industrial and retail
sectors beat expectations in November, as government support
propped up demand in the world's second-largest economy and amid
easing trade hostilities with Washington.
The set of upbeat figures released on Monday follow firm signs
of progress in Sino-U.S. trade negotiations over the weekend
after the world's two largest economies announced a "phase one"
trade deal that would nearly double U.S. exports to China.
However, growth in infrastructure and the property sector, both
key growth drivers, remained lackluster in November, underlining
key challenges for Beijing in its efforts to stabilize economic
performance next year.
Industrial production rose 6.2% year-on-year in November, data
from the National Bureau of Statistics showed, beating the
median forecast of 5.0% growth in a Reuters poll and quickening
from 4.7% in October. It was also the fastest year-on-year
growth in five months.
"Activity and spending indicators strengthened across the board
last month, though we think this uptick will prove short-lived,"
said Martin Lynge Rasmussen, China Economist at Capital
Economics.
"Admittedly, the phase-one U.S.-China trade deal could boost
both export activity and corporate investment in the near term.
But real estate, a key prop to growth in recent quarters, is
primed for a moderation as financing to the sector is being
squeezed by a regulatory crackdown."
Cement, crude steel and pig iron production all rose from a year
earlier in November, compared with a fall in the previous month.
Output growth in steel, auto and telecommunications sectors
accelerated from October.
The strong industrial figures aligned with the surprising
improvement seen in other factory indicators in November,
including purchasing managers indexes, which suggested
government support is helping domestic demand, even as exports
and producer prices shrank.
Japanese construction machinery maker Komatsu Ltd <6301.T> said
its machine usage hours in China rose for the first time in
eight months in November, echoing the trends seen in the PMIs.
Retail sales rose 8.0% year-on-year in November, compared with
an expected 7.6%, buoyed by stimulus measures and the November
Singles Day shopping extravaganza, the statistics bureau said.
The United States and China on Friday cooled their 17-month long
trade war, which has roiled financial markets, hit global
exports and disrupted supply chains.
The "phase one" agreement was first flagged by U.S. President
Donald Trump in October but fuller details of the agreement only
emerged over the weekend.
MIXED SIGNALS
The recent positive developments remove some clouds from China's
economic outlook and also mitigate the immediate need for
stimulus to support ambitious growth targets.
China's economic growth cooled to 6.0% in the third quarter, a
near 30-year low, but policymakers have been more cautious about
growth boosting measures than in past downturns.
Oxford Economics on Monday raised its 2020 growth forecast for
China to 6.0% from 5.7% "following signs that growth has
stabilized" and said significant policy easing was less likely,
given Beijing's desire to "keep its powder dry."
However, that would still mark a likely moderation in growth.
China plans to set a lower economic growth target of around 6%
in 2020 from this year's 6-6.5%, relying on increased state
infrastructure spending to ward off a sharper slowdown, policy
sources said.
Fixed asset investment showed few signs of improvement, growing
5.2% from January-November, in line with the increase seen in
the first 10 months, which was the weakest in decades.
Infrastructure investment growth, a key driver of activity,
slowed to 4.0% in January-November from 4.2% in the first 10
months.
As Beijing seeks to avert a sharper economic slowdown,
policymakers have brought forward 1 trillion yuan ($142.07
billion) of the 2020 local government special bonds quota, used
to finance infrastructure projects, to this year.
China will keep economic policies stable while making them more
effective in 2020 to help achieve its annual growth target,
state media reported last week following a top economics
meeting.
Soft patches were also seen in the property sector, once a
bright spot in the economy.
Real estate investment growth marked its weakest pace in nearly
a year while new home prices rose at their slowest pace in
nearly two years in November.
(This story refiles to correct milestone for home prices in last
paragraph to nearly two years, not three)
(Reporting by Kevin Yao and Stella Qiu; Editing by Sam Holmes)
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