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No China economic rally yet

May 13, 2013

The latest figures have revealed that China's economy is still struggling to return to growth rates seen a couple of years ago. Slowing exports to Europe and decreasing investments are at the center of current problems.

https://p.dw.com/p/18WhS
Workers assemble toys at the production line of Dongguan Da Lang Wealthwise Plastic Factory in Dongguan, China Photo/Eugene Hoshiko, File)

Industrial output in the world's second-largest economy rose by 9.3 percent in April, the National Bureau of Statistics reported Monday. Although that figure might look awesome and did mark an improvement over the 8.9 percent expansion in March, it was still less than economists had penciled in.

The April growth rate indicated that China's economic recovery was still uncertain. "This is not the start of a rally," Ren Xianfang and Alistair Thornton from IHS Global Insight said in a joint report. "It's a sputtering whimper as momentum continues to fade."

Retail sales were up 12.8 percent in April year-on-year, but slowing investment continued to cause analysts a headache. They sensed weakness in manufacturing and infrastructure construction, warning that could decelerate further with tightening measures on the housing market in place.

EU droht China mit Solar-Strafzöllen

Slumping demand

Authorities had been seeking to control property price rises with purchasing restrictions and taxes in some cities on multiple and nonlocally owned homes.

China's consumer price index, which serves as a barometer for inflation, jumped 2.4 percent last month, reflecting subdued domestic demand.

Analysts warned that Beijing must speed up structural reforms, saying that the government's policy of credit stimulus alone would not be able to change economic fundamentals and tackle the country's overcapacity problems.

"The China story remains an unsustainable credit story and we have seen little to suggest that the fundamentals are improving," Ren and Thornton commented in their report.

hg/mkg (Reuters, AFP)