State stimulus spurs growth in China

[FT News]

Further signs that China's $586bn stimulus packages had spurred economic activities in the country emerged, as Beijing announced growing factory output, bank lending and a jump in retail sales last month. But economists warned that growth in the private sector remained weak.

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Industrial production rose 8.9 per cent in May from a year earlier, higher than April’s 7.3 per cent growth. Retail sales increased 15.2 per cent after a 14.8 per cent rise the previous month.

The strong data came a day after China said investment surged to record highs last month and although exports and imports fell, economists said they had stabilised and were basically flat if measured on a monthly, seasonally-adjusted basis.

“Consumption is firm but government spending is playing a role. I am less convinced of an underlying rebound,” said Ben Simpfendorfer, RBS economist. “Strong [factory output] results will be hard to sustain in the second half because of still weak exports.”

FT.com / China / Economy & Trade - State stimulus spurs growth in China