China's Factory Output Disappoints, Property Sector Stuck in Doldrums

• China's May industrial output lagged expectations, and a slowdown in the property sector showed no signs of easing despite policy support, adding pressure on Beijing to shore up growth. Apart from retail sales that beat forecasts due to a holiday boost, the flurry of data on Monday was largely downbeat, underscoring a bumpy recovery for the world's second-largest economy.
• May industrial output grew 5.6% from a year earlier, National Bureau of Statistics (NBS) data showed, slowing from the 6.7% pace in April and below expectations for a 6.0% increase in a Reuters poll of analysts.
• Manufacturing investment in the first five months showed robust growth of 9.6%, underpinned by China's emphasis for "quality growth" through technological breakthroughs and innovation this year. On the other hand, economists have warned that rising trade tensions with the West over China's so-called over-capacity may impose more challenges to Chinese solar and electric vehicle producers.
• China's property market slump, high local government debt, and deflationary pressure remain heavy drags on economic activity. The latest figures point to an uneven growth that reinforces calls for more fiscal and monetary policy support.
• China's economy grew 5.3% in Q1, surpassing expectations, yet achieving the government's ambitious 5% annual growth target seems challenging due to a stagnant property sector.
• To address the downturn, China's central bank introduced a re-lending program for affordable housing, acknowledging that policy adjustments will take time to stabilize the market. Despite efforts to support homebuyers and stimulate demand, economic indicators like new bank lending and consumer confidence remain subdued, impacting broader economic recovery efforts.

(Source: Reuters)