China’s factory output grew 6.5 percent in May from a year earlier, slightly better than expectations, but fixed-asset investment grew 8.6 percent in the first five months of the year, less than forecast. Analysts polled by Reuters had predicted factory output would grow 6.3 percent in May, easing slightly from 6.5 percent growth in April. Fixed asset investment had been forecast to grow 8.8 percent over the first five months of the year, easing from 8.9 percent in January-April.
Retail sales rose 10.7 percent in May from a year earlier, unchanged from April and above analyst expectations for a 10.6 percent rise. Growth of private investment slowed to 6.8 percent in January-May from 6.9 percent in the first four months, suggesting a slight weakening of the private sector’s appetite to invest as small- and medium-sized private firms still face challenges in accessing financing.
Private investment accounts for about 60 percent of overall investment in China. China is targeting growth of around 9 percent in fixed asset investment for 2017, and expects retail sales to increase about 10 percent. China has cut its economic growth target to around 6.5 percent this year to give policymakers more room to push through painful reforms and contain financial risks after years of debt-fueled stimulus.
Beijing has continued to tighten the screws on riskier forms of financing, which is expected to drag on the world’s second-largest economy in coming months after an unexpectedly strong first quarter.