China April data to show growth stabilizing, for now

Tue May 6, 2014 1:45am EDT
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BEIJING (Reuters) - Growth in China's factory output and investment likely stabilized in April as the government uses targeted policy measures to underpin growth, while the pace of declines in exports and imports may have eased, a Reuters poll showed.

However, the world's second-largest economy may only get a temporary boost from such policy support, as growth will inevitably slow while the government seeks to tackle high debt levels and excessive factory capacity.

China's industrial output may have grown 8.9 percent in April from a year earlier, slightly ahead of the 8.8 percent rise in March, according to the poll of 18 economists.

Fixed-asset investment growth likely grew 17.7 percent in the first four months from a year earlier, also slightly firmer than the 17.6 percent pace seen in the first three months. The government only publishes cumulative investment data.

The government has in recent weeks hastened construction of railways and affordable housing and cut taxes for small firms to support the slowing economy, but top leaders ruled out any forceful policy measures in favor of reforms.

"Economic growth is stabilizing but it's hard to see a rebound because policies that help stabilize growth are limited," Peng Wensheng, chief economist at CICC said in a research note.

"The economy still faces downward pressures in the future."

The government is trying to restructure the economy so it is driven more by consumption than the traditional engines of exports and investment, but wants to avoid a sharp slowdown that could fuel job losses and threaten social stability.

Recent official and private factory surveys for April pointed to initial signs of stabilization, but external demand likely remained weak.   Continued...

A forklift transfers a shipping container for export at a port in Lianyungang, Jiangsu province May 5, 2014. REUTERS/China Daily