China's Weak Economic Data Highlighted Difficulties of Meeting 5% Annual Growth Target

Li Chen
17 May, 2024
Hong Kong

Stocks in Shanghai and Hong Kong faced selling pressure after the latest economic data highlighted weak consumer demand. 

On Friday, the National Bureau of Statistics reported retail sales, fixed investments, home prices, and industrial output data. 

The latest economic data, coupled with credit demand data released last week, highlighted that the government may face challenges in meeting its annual economic growth target of 5% this year. 

Weak consumer domestic demand, slowing private sector investment, and ongoing property sector weakness are contributing to the weakening economic growth profile of the second-largest economy. 

Retail sales rose less-than-expected 2.3% in April, a 15-month low, as consumers avoided large purchases amid job market uncertainty and ongoing property market weakness. 

Retail sales growth slowed from a 3.1% rise in March a year ago. 

Industrial output, one of the few bright spots in the Chinese economy, rose faster-than-expected by 6.7% in April.

China's fixed-asset investment rose 4.2% from a year ago in the January–April period, slower than 4.5% in the January–March period. 

Property investment deepened to 9.8% in the first four months from 9.5% in the first quarter, prompting calls for wider and faster regulatory reforms. 

Meanwhile, overall residential floor space sold in April declined by 20.2%, and the sales value of new homes dropped by 28.3% from a year ago. 

Prices of new homes in large and well-developed cities, generally known as first-tier cities, decreased by 0.6% from March, the 11th month of decline in a row, the statistical bureau reported Friday. 

At the same time, existing home prices decreased by 0.9% from March. 

The National Statistics Bureau said new home prices declined in 64 of 70 medium and large cities in April, an increase from 57 cities in March. 

However, existing home prices fell in 69 cities in April, matching the number in March. 

Despite the weakening in investment, the jobless rate declined to 5.0% in April from 5.2% in March, the statistical bureau said on Friday. 

 

China Stock Movers 

The CSI 300 index decreased 0.2% to 3,633.04, and the Hang Seng index advanced 0.3% to 19,433.14. 

Ping An Insurance Group advanced 1.6% to HK$43.70 on widespread rumors that China's insurance giant is considering its stake in UK-based HSBC Holdings. 

HSBC decreased 3.1% to HK$67.95. 

Property developers were in focus for the second day in a row after property investment in the first four months fell at a faster pace than in the first quarter. 

The weakness in property sector investment raised hopes of concrete steps from the government. 

China Vanke rose 4.2% to HK$5.97, China Resources Land decreased 1.1% to HK$31.55, and Longfor Group soared 7.4% to HK$14.80. 

Banks were among the most actively traded stocks in Shanghai and Hong Kong. 

ICBC decreased 0.6% to HK$4.68, Bank of China declined 0.1% to HK$3.87, and Agriculture Bank of China fell 0.2% to $3.81. 

Tencent Holdings advanced 0.5% to HK$395.60 and Baidu Inc. fell 0.5% to HK$111.50 after the two leading tech companies reported better-than-expected quarterly results.