China’s inflation eases, as economy slows further

SHANGHAI – The Associated Press

A vendor naps as she waits for customers at a market in Hefei, Anhui province May 11. China’s annual consumer inflation moderated in April official data shows. REUTERS photo

China’s economy is slowing further, defying hopes it may have “bottomed out,” with data for April showing sharper than expected declines in investment and industrial production.

Data released by the National Bureau of Statistics on May 11 showed inflation also eased, to 3.4 percent in April from 3.6 percent the month before, giving the government greater leeway to ease policy to boost growth. A reading of the latest data suggests more aggressive action may be needed to get the world’s second-largest economy back on track, economists said.

In particular, industrial production rose 9.3 percent from a year earlier in April, slowing from a nearly 12 percent increase in March.

“China’s economy is even weaker than thought, with industrial production growth back in single digits for the first time since the global financial crisis and electricity production flat lining,” said Alistair Thornton of IHS Global Insight.

“We believe the government will step up efforts to stimulate the economy, even as genuine concerns remain regarding the very real possibility of over-stimulating,” he said.

China’s leaders face a challenge in keeping inflation under control while spurring growth. Rising pressures from wages and other costs are squeezing businesses. Consumers are feeling a pinch, too, as already high prices outstrip rising incomes.

Other data reported May 11 showed investment in factory equipment and construction, so-called fixed-asset investment, rose 20.2 percent in January-April. That compared with a 25.4 percent rate of increase a year earlier. Investment in real estate climbed 18.7 percent, down from 34.3 percent growth in the first four months of last year and from 23.5 percent growth in January-March.