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August 13, 2016

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China economy posts weaker activity in July

CHINA’S economy is still struggling as it continues to restructure its older industrial sectors amid a slowdown according to several economic data for July released yesterday.

The country’s gross domestic product grew 6.7 percent year on year in the second quarter, flat with the first quarter. But other economic indicators showed downward pressure.

China’s industrial production expanded 6 percent annually last month, a tad below the 6.2-percent growth in June, the National Bureau of Statistics said in a statement yesterday.

Foreign direct investment in the Chinese mainland fell 1.6 percent year on year in July, from a 9.7 percent increase in June, according to official data released yesterday.

FDI reached 49.76 billion yuan (US$7.71 billion) last month, according to figures from the Ministry of Commerce.

Fixed asset investment for January to July rose 8.1 percent but it was the slowest growth since 1999, the bureau said.

Sheng Laiyun, a bureau spokesman, blamed that on the difficulties faced by some private firms in getting financing.

“Most private companies have to rely on their own sources of funding,” Sheng said yesterday. “Feedback from the companies showed that they still face difficulties getting bank loans.”

Meanwhile investment by state-run companies surged 21.8 percent during the period, but that by private firms grew just 2.1 percent annually over seven months, down from the 2.8-percent growth in the first half of the year. Investment by private companies accounts for two-thirds of the total FAI.

The drop in FAI was also led by a 22.9-percent decline in mining and cooling investment activities in the northeastern provinces of Liaoning, Jilin and Heilongjiang.

Private FAI tumbled 31.6 percent in the first seven months in the three provinces known as the hub of heavy manufacturing.

“July’s data was largely influenced by the massive floods along Yangtze River Economic Belt, and government’s measures to cut overcapacity,” said Deng Haiqing, chief economist at JiuZhou Securities Co.

The bureau pointed out that growth in personal consumption has also slowed as the total domestic retail sales of consumer goods increased10.2 percent year on year in July, below June’s 10.6 percent growth.

China’s new yuan-denominated loans in July dropped substantially, falling short of market expectations, as loans to businesses shrank unexpectedly, official data showed yesterday.

New loans stood at 464 billion yuan, a drop from 1.01 trillion yuan from a year earlier and also lower than the 1.38 trillion yuan registered in June, according to the People’s Bank of China website.

The figure missed market forecast of around 800 billion yuan and was at the lowest level in two years.

The slow credit expansion could be partly attributed to the fact that loans to non-financial companies decreased 2.6 billion yuan, in sharp contrast with a 4.53 trillion yuan increase in the first six months of the year.


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