China’s industrial output and retail sales for November misses targets

China data disappoints

Over the weekend, China reported far softer than expected November exports and imports, reflecting slower global demand and waning domestic factory activity as profit margins narrow. Retail sales have been weak for the slowing economy this year, with auto sales particularly hurt from the weak retail growth.

A Reuters poll this week showed property investment would slow to 4 percent in 2019, while housing sales are expected to fall 5 percent amid slowing economic activity and tough financing conditions for smaller developers.

While solid growth in the sector could cushion the impact of a long government crackdown on debt and simmering trade tensions, policymakers worry it could stoke fears of a sudden crash if prices climb too quickly given elevated levels of household debt.

Friday's data showed bright spots in the Chinese economy steering toward a high-quality path.

Exports to the crucial United States market have held up so far but analysts forecast a dimming picture in the months ahead, reinforcing the need for China to rely on its legions of domestic consumers to fuel the economy.

Economic data from China is closely watched by many amid the trade spate between the world's two largest economies, with U.S. President Donald Trump taking issue with America's massive trade deficit with China. "So the worst is yet to come and policymakers will be very anxious, particularly with consumption growth falling off a cliff", wrote Trinh.

The year-to-date acceleration was due to weaker expansion earlier this year, according to Goldman Sachs.

Infrastructure investment, a major growth lever that Chinese policymakers have pulled in past slowdowns, rose 3.7 percent in the first 11 months.

To stabilize growth, the country may focus on improving weak links in infrastructure next year, when the growth of infrastructure investment is expected to rebound significantly, Lian said.

The data marks the 43rd straight month of price increases, Reuters calculation showed, a log trend that's remained intact despite curbs created to rein in a near-three year real estate boom that has spread from megacities to the hinterland.

Private sector fixed asset investment growth, which accounts for about 60% of overall investment in China, gained 8.7% in January to November, compared with an 8.8% increase in the first 10 months of the year.

Stephen Innes, head of Asia-Pacific trade at OANDA, warned: "The data lend support to the market's view that things will get worse in China before they get better, this despite investment rising".

The rate remained below the government's target of controlling the surveyed urban unemployment rate within 5.5 percent this year.

Property sales by floor area grew 1.4 per cent in January-November, slowing from an increase of 2.2 per cent in the first 10 months.

He said that China must maintain employment.

"For monetary policy, there is still the possibility of cutting the RRR (reserve requirement ratio), but cutting interest rates is not needed for the time being", said Tang Jianwei, senior economist at Bank of Communications in Shanghai.

Nevertheless, China is expected to soon announce further measures to boost consumption and business confidence.

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