China’s industrial production rose faster than expected in May, while retail sales and urban investment slowed unexpectedly, raising doubts about whether the world’s second largest economy is stabilizing after a disappointing first quarter.
Retail sales rose 10% in May from a year earlier. That followed a 10.1% advance in April and median estimates calling for the same. Industrial output rose 6% from a year earlier following a similar advance in April. A median estimate of economists called for a gain of 5.9%. Meanwhile, China’s fixed-asset investment growth slowed sharply to 9.6% annually in the January to May period following a 10.5% advance in the four months through April. A median estimate of economists called for an increase of 10.5% annually.
The data highlight the difficult choice facing government officials: increase monetary stimulus and rely on traditional investment-led growth, or let the country’s highly inefficient industrial sector cool further while reducing overcapacity.
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