Chinese Economic Indicators Signal a Growth Turning Point

China’s factory output and auto sales accelerated in July, adding to signs a slump in the world’s second-largest economy might be stabilizing.

A decline in wholesale prices slowed, suggesting weak demand might be strengthening, according to figures released Friday. That added to earlier data showing July imports rebounded from the previous month’s contraction.

The positive indicators could help to support Chinese leaders who have been resisting pressure to stimulate the economy. They have said they want to focus instead on longer-term reforms aimed at making the economy more efficient.

Despite the improvement in the latest indicators, growth is unlikely to return to earlier double-digit rates.

“The China boom is over and we need to get comfortable with steadily slower growth rates,” said Andy Rothman of CLSA in a report. “The Party leadership is comfortable with current economic conditions and will focus on longer-term restructuring rather than on a short-term stimulus.”

China’s economic growth fell to a two-decade low of 7.5 percent in the second quarter but the latest trade and industrial data suggest the slowdown might be leveling out.

Growth in factory output accelerated to 9.7 percent from June’s 8.9 percent, the National Bureau of Statistics reported. Investment in factories and other fixed assets rose 20.1 percent.

Producer prices, or prices of goods as they left factories, fell 2.3 percent from a year earlier. But that was smaller than June’s 2.7 percent decline, suggesting demand might be strengthening following a slump that has caused producer prices to decline steadily for more than a year.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza