It is reported that China economic performance turned out to be stabilizing in May from April sharp deterioration although it remained rather weak and consumer prices grew at the slowest pace in nearly two years, giving more space for easing policies.

The National Bureau of Statistics said industrial production last month expanded 9.6%YoY up 0.3 percentage point from that in April. Fixed asset investment increased 20.1% to CNY 10.8 trillion in the first five months, almost the same as the growth of 20.2% in the first four months.

Retail sales gained 13.8% to CNY 1.67 trillion in May slower from the pace of 14.1% a month ago. The performance was largely in line with earlier market expectation which pointed to signs of stabilization and pin hope on a bottoming-out economy in the current quarter.

Mr Helen Qiao managing director at Morgan Stanley Research said "Except the retail sales, industrial production and investment's data came out as we had expected. They confirmed growth is stabilizing after the downside surprise in April."

Mr Zhou Hao an economist at Australia and New Zealand Banking Group said but weaker-than-expected retail sales growth indicated a sizable deterioration in domestic demand.

He said that "It showed requirement for a faster implementation of fiscal policy. With the announced stimulus measures gradually filtering through, we expect growth momentum in real activities to pick up strongly from this month onward."

Another unexpected spot was the consumer prices, which rose at the slowest pace in 23 months and brushed off concerns of stubborn inflationary pressure.

Source - Shanghai Daily

(www.steelguru.com)