China May data to suggest economy steadying but not perking up: poll

Fri Jun 3, 2016 5:14am EDT
 
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BEIJING (Reuters) - A flurry of data from China in coming weeks is expected to reinforce views that the world's second-largest economy is slowly steadying but not gaining momentum as investors hoped just a few months ago, a Reuters' poll of economists showed.

Increased government infrastructure spending and a housing recovery are supporting growth even as Beijing appears to be pulling in the reins on a record credit binge amid worries about the dangers of using too much debt to stimulate the economy.

Though investors' fears of a hard landing have ebbed, concerns remain that Beijing has not moved fast enough on key reforms such as cutting excess capacity, while debt continues to rise and the yuan currency comes under pressure.

Factory surveys earlier this week gave somewhat mixed signals on the health of manufacturing, with some signs of steadying but companies continuing to shed jobs in response to weak demand at home and abroad.

With the economy showing no signs of a quick recovery, analysts expect Beijing to keep up its infrastructure spending spree, but are dialing back expectations for further broad policy easing by the central bank.

"China’s policy easing momentum has already peaked. We think that the recent mix of government policy signals should be taken together, in light of policymakers' ongoing bid to achieve both its targets of stabilizing near-term growth and progressing on structural reforms," UBS analysts said in a note on Thursday.

Loan and money data could add to the debate over whether Beijing has shifted to a more cautious stance as debt climbs.

New loans are expected to pick up from April but remain well below the records in the first quarter. After lending hit a six-month low of 556 billion yuan (58.57 billion pounds) in April, new loans in May are forecast to total 750 billion yuan.

Growth in M2 money supply, however, may have fallen to an 11-month low, in line with recent calls from the government to reduce leverage. M2 was seen rising 12.5 percent in May from the same period a year earlier, down from 12.8 percent in April.   Continued...

 
A worker walks through an aluminium ingots depot in Wuxi, Jiangsu province September 26, 2012.    REUTERS/Aly Song/File Photo