China's factory output slows, retail sales unexpectedly robust
An employee at a company manufacturing lithium batteries in Huaibei, in eastern China's Anhui province. — AFP
BEIJING: China's factory output growth hit a six-month low in May, while retail sales picked up steam, offering temporary relief for the world's second-largest economy amid a fragile truce in its trade war with the United States.
The mixed data comes as China's economy strains under U.S. President Donald Trump's tariff onslaught following his return to the White House in January.
Industrial output grew 5.8% from a year earlier, National Bureau of Statistics data showed on Monday, slowing from 6.1% in April and missing expectations for a 5.9% rise in a Reuters poll of analysts. It was the slowest growth since November last year.
However, retail sales, a gauge of consumption, rose 6.4%, much quicker than a 5.1% increase in April and forecasts for an expansion of 5.0%.
Data released earlier this month showed exports to the U.S. plunged 34.5% in May from the previous year, the sharpest drop since February 2020, while deflationary pressures deepened last month.
Retail sales had shown resilience on the back of strong Labour Day holiday spending and a consumer goods trade-in programme heavily subsidised by the government.
An extended "618" shopping festival, one of China's largest online retail events by sales, which had started earlier than usual this year, also helped drive consumption.
Fixed asset investment expanded 3.7% in the first five months of this year from the same period a year earlier, compared with expectations for a 3.9% rise. It grew 4.0% in the January to April period.
"The tariff truce may not be conducive enough for an immediate rebound in manufacturing investment," economists at Citi said in a research note.
Despite reaching an agreement to temporarily walk back much of their triple-digit tariffs after trade talks in Geneva in May, the world's two largest economies were at odds again over a raft of export controls that had throttled each other's key supply chains.
Trump last week said a trade deal that restored a fragile truce in the U.S.-China trade war was done, a day after negotiators from Washington and Beijing agreed on a framework covering tariff rates.
That means the U.S. will charge Chinese exports a total of 55% tariffs, he said. A White House official said the 55% would include pre-existing 25% levies on imports from China that were put in place during Trump's first term.
Beijing last month rolled out a package of stimulus measures, including interest rate cuts and a major liquidity injection, aimed at shielding the economy from the hit from U.S. tariffs.
However, analysts continued to flag challenges for China in hitting its growth target of roughly 5% this year and warned imminent stimulus was unlikely. - Reuters
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
36 minutes ago
- New Straits Times
Architect of transformation: How Roslan Abdullah quietly reshaped Malaysia's auto landscape
KUALA LUMPUR: Former Proton Holdings Bhd deputy chief executive officer Roslan Abdullah has found a new challenge as he takes up position as chief operating officer of Great Wall Motors Malaysia, a Chinese carmaker that has been making waves in Southeast Asia, especially Thailand Having held key positions in Modenas, Isuzu, DRB-HICOM Bhd, Honda Malaysia and Proton, Roslan has a depth of experience that would serve Great Wall Motors well as they navigate the current challenging automotive landscape with technology changing quickly and competition heating up like never before. An independent automotive analyst Shamsul Yunos said during his tenure at Honda Malaysia, the brand saw a major resurgence, overtaking Toyota for the first time to take their place at the top of the non-national sales chart, an effort that is decades in the making. "Honda has almost always played second fiddle to Toyota for the last four decades despite their best efforts to offer models that are offer the latest technology and innovative styling. "His contributions to Honda was little known while he was on the job and were only shared by former team members after he has left the company, and indication that he isn't one for the spotlight, preferring quiet strategy over grand pronouncements," Shamsul told Business Times. Honda gained significant competitive advantage through pricing and innovative marketing strategies during his time and the change appeared seamless the outside although it must have required significant effort from everyone from the factory floor to the sales floor. Announcing his appointment on Monday, GWM Malaysia managing director Cui Anqi said Roslan leadership experience and strategic insight will be instrumental in strengthening its operations as a long-term player in Malaysia's automotive landscape "My vision is to position GWM as a trusted long-term mobility partner through a strong and reliable dealer and service network, a product portfolio that meets the needs of all Malaysians and a firm commitment to delivering seamless ownership experiences," Roslan said in a statement. Roslan is credited with a calm leadership style that allowed for continuous and measured growth at both Honda and Proton and upon news of his departure from Proton, numerous former staff expressed their best wish for a leader that is also seen as a team player. "When he accepted the job at Proton, many wondered why he volunteered for this highly challenging 'National Service' and over the years the transformation in Shah Alam was gruelling and the pace merciless as the company introduced new models from Geely and updated their local offerings," Shamsul said. "The stories of clash of cultures with the new technical partner were many and some quite fantastic but the media could never get anything other than positive tones from the Malaysian team that he headed," he added. Apart from organisational changes, Roslan faced a market that was unforgiving of Proton's past records when it comes to after sales and customer support. Changes he implemented in parts management and logistics did not make headline news but improved customer satisfaction and reduced negative association with the brand. His focus on improving after sales performance at Proton last was comprehensive, covering everything from technical training for workshop staff to management reorientation for business owners. Enriched by the challenges of taking a global brand to number one in the sales chart and nurturing a very vulnerable Proton back to health, his new role at GWM may prove to be the most challenging yet as China brands are currently battling for Malaysian market dominance. "While the post may seem like a downgrade from deputy CEO at Proton but the challenge is no less intense. "He lands at his new post as the company and whole industry is going through a brutal price war initiated by ambitious sales target set by Chinese carmakers for Malaysia and Southeast Asia, which is a known fortress for Japanese brands," Shamsul said. At Proton, Roslan had expressed concern that the heavy discounting and price war is not sustainable in any industry, much less a high investment, thin margin environment of the global automotive industry. So far GWM has been reluctant to participate in the price war. Shamsul said Roslan's journey in the automotive industry began in 1993 with a small wiring loom supplier in Terengganu after acquiring his accounting degree in Brighton a year earlier. This gave him first-hand experience of the automotive industry from lowest rung to the highest echelon. "This is a useful perspective for GWM as they navigate a difficult market like Malaysia, which has a very valuable local interest to protect in the automotive industry. "While the new players may be impatient to get market share, they should best follow the proven tracks of Japanese carmakers that grew together with Southeast Asia, giving back to the local economy as they enjoy warm market reception," he added.
Malaysian Reserve
an hour ago
- Malaysian Reserve
Alpari Report Gold above $3K: the appeal of safe haven assets in volatile times after 'Liberation Day'
LONDON, June 16, 2025 /PRNewswire/ — In March, the spot price of gold rose above $3K where it has stayed, currently sitting above $3.4K. Apart from briefly exceeding this price a few days on 14 March and dropping again, this is the first time the asset has hit this record price. A key reason for the high price of gold is the current economic and geopolitical instability. The broker Alpari has put together a report on gold and other safe-haven assets, and why investors turn to them during periods of instability. One reason for gold's reliability as a safe haven asset is its scarcity, with over 90% of the world's gold already mined according to the World Gold Council. While it is only as recently as March that gold reached the landmark price of $3,000, it had already been reaching high prices in 2024. Central banks increasing their stocks of the precious metal was one key factor, with central banks around the world purchasing over 1,000 tonnes of gold last year. Uncertainty around what the effects of President Trump's tariffs and other policies will be has caused volatility, sending U.S. investors in particular in search of safe havens. From December 2024 to 17 February, almost 20 million ounces of gold had been imported into the country, according to the World Gold Council. Alpari's guide also includes an overview of how gold is priced and how it can be traded against different currencies. The worldwide benchmark is XAUUSD, or the price of 1 troy ounce gold quoted in U.S. dollars, but 'gold crosses' against currencies can also give traders the opportunity to make a profit based on differing gold prices around the world. In 2024, gold vs the U.S. dollar or XAUUSD climbed 27%. In contrast, due to the economic situation in Japan, with labour shortages and low interest rates, gold vs the yen or XAUJPY climbed by a much higher 42%. Alexey Efimov, Market Analyst at Alpari, comments: 'Trade war fears and central bank purchases should ensure that bullion's supportive drivers remain intact. The evident risks on the global landscape are playing to gold's strengths and amplifying its time-tested virtues, be it as a safe haven or an inflation hedge. About Alpari: Alpari is a long-established leader in online financial trading. They pioneered online forex trading for retail clients 25 years ago, and remain focused on enabling individuals to access the potential of global financial markets Alpari clients are individuals with an appetite to generate financial returns through self-directed trading. They are comfortable taking risks in order to generate returns and are willing to invest time to build the skills needed to succeed Alpari's promise to these clients is to enable them to 'access global trading opportunities securely'. They believe that individuals anywhere in the world should be able to access opportunities in financial markets – where local political environments do not support domestic regulation, they provide solutions for individuals to access our services offshore, but offering the same service standards and client protections as a regulated business. ContactHana MontgomeryShout Bravohello@ Logo –
The Star
an hour ago
- The Star
Mideast tensions test export-driven economy
Time sensitive: Lee (centre) and his wife Kim Hye-Kyung (left) arrive at a ceremony in Seoul. South Korea is only just showing signs of market recovery following Lee's recent inauguration, which ended a six-month political vacuum. —AFP SEOUL: Rising global volatility from Middle East tensions poses fresh risks for South Korea's export-driven economy, stoking fears of supply disruptions. Still, analysts expect the impact to remain limited unless the conflict escalates further. Oil prices surged after Israel launched airstrikes on Iran last Friday, followed by retaliatory attacks over the weekend. Brent crude spiked more than 10% intraday – its biggest move since 2022 – before closing up 7%. West Texas Intermediate gained 7.62%. South Korea, already grappling with sluggish growth and rising external headwinds, reacted swiftly. The benchmark Kospi snapped a seven-day winning streak last Friday, reversing early gains to close lower amid the geopolitical shock. 'A prolonged surge in oil prices could further jeopardise growth, which is already projected to fall below 1% this year,' said Jung Kyu-chul, head of economic forecasting at the state-run Korea Development Institute. 'Higher oil prices will squeeze manufacturers by raising import and production costs, delivering a direct blow not just to industry, but to domestic demand and the broader economy.' The timing of the shock was especially sensitive. South Korea had only recently shown signs of market recovery following the June 4 inauguration of President Lee Jae-myung, which ended a six-month political vacuum. Investors had hoped the new administration would bring policy clarity and revive momentum amid rising US protectionism and weak domestic demand. In May, South Korean exports declined for the first time in four months. First-quarter gross domestic product also contracted 0.2%, and analysts warned that deepening trade friction could continue to weigh on the real economy. Buoyed by optimism over political stability and a potential policy reset, the Kospi jumped nearly 11% from May 12 – the strongest monthly gain among G20 markets, far outpacing runner-up Indonesia's 4.8% rise. The rally was fuelled by foreign investors turning net buyers for the first time in 10 months, snapping up 4.9 trillion won just in the past two weeks. But last Friday's geopolitical shock reverberated across markets. The Kospi fell 0.87% to close at 2,894.62, pulling back after hitting a three-year high of 2,920 the previous day. The South Korean won weakened sharply, slipping to an intraday low of 1,371 won per US dollar before settling at 1,369.6 won. Safe haven demand surged, with gold climbing 1.6% to US$3,457 an ounce in New York. In South Korea, gold prices rose 2.34% to 150,530 won per gramme, breaching the 150,000-won threshold for the first time since early May. Yet, many analysts see the risk to the South Korean economy as temporary. Kim Sang-bong, an economics professor at Hansung University, downplayed the broader impact of the recent oil price gains. 'Oil is still relatively cheap, hovering around US$70 a barrel. Even with a modest rise, the economy is unlikely to suffer serious fallout,' Kim said. 'While energy costs do present short-term pressure, South Korea's fundamentals remain strong enough to absorb the shock. A more pressing concern is the uncertainty around US tariffs.' South Korea and the United States are in ongoing talks to renegotiate trade terms, with Washington temporarily deferring new tariff measures until early next month. Local markets are expected to hold steady unless the conflict deepens, analysts said. 'As long as the Israel-Iran conflict doesn't evolve into a full-scale war, the impact on local markets is likely to remain limited,' said Shin Seung-hwan, analyst at Samsung Securities. — The Korea Herald/ANN
