China's industrial production during the first two months of the year grew at its slowest rate since the global financial crisis, the government said Saturday, with top officials vowing to support growth and the volatile stock market. The measure, which gauges output at the country's factories, workshops and mines, rose 5.4 percent year-on-year in January and February.
The figures were the weakest since November 2008 as China seeks to effect a difficult transition from an investment and export-driven growth model to one led by consumer spending. Despite the darkening outlook the People's Bank of China governor Zhou Xiaochuan told reporters Saturday that there was no need for "excessive" monetary stimulus to hit the government's target of at least 6.5 percent growth over the next five years.
And while worries about the economy have weighed on investors this year and spurred a stock market slump, on Saturday the chairman of the China Securities Regulatory Commission said at a briefing that the state would intervene "if the market is not working properly at all or continues to fail". "It will be too early to talk about withdrawing" state support for stocks "for rather a long time into the future", Liu Shiyu said.
Retail sales, a key indicator of consumer spending, increased 10.2 percent in the same period, the National Bureau of Statistics (NBS) said. Fixed-asset investment, a measure of mainly government spending on infrastructure, expanded 10.2 percent on-year for the first two months of 2016. Results fell short of economists' expectations, according to a survey by Bloomberg News, which predicted a year-on-year increase in retail sales of 10.9 percent, while industrial production was projected to expand 5.6 percent.
NBS analyst Jiang Yuan blamed the disappointing industrial output data on sluggish foreign demand, the government's efforts to cut pollution-heavy production of steel, cement and coal and slumping output of tobacco products. "The decline in industrial output growth in the January-February period was due to industrial structural reforms and the unstable basis of an industrial recovery as well as seasonal factors," Jiang said in a statement.
The NBS released statistics covering two months to smooth out distortions due to China's Lunar New year holiday last month. Wang Baobin, another NBS analyst, attributed accelerating fixed-asset investment to government policies and construction projects to support the economy and a pickup in property investment growth to three percent compared to one percent for all of 2015.
"The government continued to earmark funds at the start of this year to accelerate the start of a series of major constructions," Wang said. But analysts with investment bank CICC Macro said that the pick-up in public infrastructure spending will not boost private sector investment unless "their confidence can be restored". China's leaders have sought to reassure global investors during the annual meeting of the rubber-stamp National People's Congress (NPC), with the country's top economic planner saying last week that the country "absolutely will not have a hard landing".
Premier Li Keqiang set the growth target for this year in a range of 6.5-7 percent, acknowledging in a speech opening the NPC that "China will face more and tougher problems and challenges in its development this year, so we must be fully prepared to fight a difficult battle". The data are the latest snapshot of the health of the Asian colossus - a major driver of the global economy - which grew 6.9 percent last year, the slowest rate in a quarter century.