China's economy maintains recovery momentum in May

Gulf Today

14 hours ago

China's economy continued its recovery trend in May amid robust macroeconomic policies despite mounting external uncertainties, official data showed on Monday.
According to a report by China Daily, data released by the National Bureau of Statistics shows that China's industrial added value above designated size increased by 5.8 per cent year-on-year in May. This indicator reflects the activity levels in industries such as manufacturing, mining, and utilities, which represented a slowdown compared to the 6.1 per cent growth recorded in April.
Retail sales, a key measurement of consumer spending, grew by 6.4 per cent year-on-year in May versus a 5.1 per cent rise in April.
Fixed-asset investment - a gauge of expenditures on items including infrastructure, property, machinery and equipment - rose by 3.7 per cent during the January-May period compared to a year ago, while in the first four months, it grew by 4 per cent.
The surveyed urban unemployment rate came in at 5 per cent in May, down from 5.1 per cent in April, according to the NBS.
The NBS noted that China's broader economy maintained steady growth in May, backed by supportive macroeconomic policies, pointing to the strong resilience and vitality.
Meanwhile, the NBS warned of mounting external uncertainties, saying the foundation for sustained recovery is yet to be consolidated.
In the next step, the NBS said the country should unswervingly manage its affairs well, adding that higher priority should be given to expanding domestic demand and strengthening domestic economic circulation. The key focus should also be placed on stabilising employment and promoting high-quality development.
Meanwhile China's yuan steadied against the dollar on Monday, as a firmer-than-expected official guidance fix partially offset uncertainty around the broad economic outlook and currency vulnerability.
China's factory output growth hit a six-month low in May but retail sales picked up steam, while home prices fell and new bank lending rose less than expected.
The mixed bag of data fed into uncertainty around the economic outlook for the rest of the year, despite a trade truce between Washington and Beijing, analysts said.
'The US-China trade truce was not enough to prevent a broader loss of economic momentum last month,' Zichun Huang, China economist at Capital Economics, said in a note. 'With tariffs set to remain high, fiscal support waning and structural headwinds persisting, growth is likely to slow further this year.'
As of 0345 GMT, the onshore yuan was 0.01 per cent higher at 7.1849 per dollar, while its offshore counterpart was up about 0.04 per cent at 7.1860. Investors, meanwhile, were anxiously awaiting more policy guidance from top financial officials, including from the central bank governor and securities regulator, who are scheduled to speak at the annual Lujiazui Forum later this week.
Market participants expect the yuan to continue trading sideways as they await fresh catalysts, either from the dollar's broader performance or any policy signals from the upcoming Lujiazui Forum, a foreign bank trader said.
The annual forum is scheduled for June 18-19 in Shanghai. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate at 7.1789 per dollar, and 65 pips firmer than a Reuters' estimate of 7.1854. The spot yuan is allowed to trade 2 per cent either side of the fixed midpoint each day. In global markets, the dollar firmed against major currencies, underpinned by rising safe-haven bid on the back of persistently heightened Middle East tensions.
Meanwhile China and Hong Kong stocks held steady on Monday, as investors weighed mixed macroeconomic data and remained cautious amid persistent geopolitical tensions that continued to dampen risk appetite.
China's blue-chip CSI300 Index edged down 0.1 per cent by the lunch break, while the Shanghai Composite Index gained 0.1 per cent. Hong Kong benchmark Hang Seng was also down 0.1 per cent.
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 golden week holiday and discounts on e-commerce platforms starting in mid-May, ahead of the so-called '618' shopping event, should have helped to boost consumption during the month, said UBS analysts in a note.
'But it remains to be seen whether the momentum can sustain, especially as the effects of the consumer trade-in programme begin to fade and tariff outlook remains uncertain.'
Shares of energy equipment and service providers jumped, with Xinjiang Keli New Technology Development Co up 24 per cent. New bank lending in China rose less than expected in May after hitting a nine-month low in April, as companies and consumers remained cautious about taking on more debt despite interest rate cuts and a trade truce between Beijing and Washington.
Agencies