China: worrying figures

• August data figures show a worrying slowdown
• The downturn in the property market worsens
• The PBOC injects more liquidit

In China, August data figures show a worrying slowdown in economic growth. Year-on-year growth in industrial production, for example, fell below 7%, the lowest since early 2009. We knew that the early-summer upturn was fragile: global demand is struggling to recover, and Chinese private investment is also paying for past excesses. Growth in investment has continued to slow, given slightly slower growth in domestic credit, overcapacities and restructuring measures in the industry and, most importantly, the downturn in the real estate market. In response to this week's poor figures, the central bank has just announced plans to inject CNY500bn (EUR63bn) into the financial system. The five major state-owned banks will have to use that money primarily to finance SMEs and the construction of social housing. As in the last few months, the authorities are still limiting their actions to targeted stimulus measures, preferring to maintain their focus on structural reform. However, they are likely to announce more policy measures in the coming weeks, particularly in order to boost the real estate sector, or a prolonged growth slowdown could well end up reducing the authorities' scope for economic reform.