Activity indicators show Chinese economy in decline

HONG KONG – Economic activity indicators in China lost momentum across the board in April. Industrial production growth slowed to 6.0% y/y, down 0.8%; fixed asset investment growth dropped marginally to 10.5% for the January-April period from Q1’s 10.7%; and retail sales edged down 0.2% to 10.1%.

In a summary of the indicators, ANZ Bank says exports in CNY terms declined 4.1% y/y in April, compared with a 18.7% gain in March. In USD terms, exports contracted 1.8% y/y. Meanwhile, imports in CNY terms contracted 5.7% from -1.7% in March. The trade balance came in at USD45.6bn.
CPI inflation remained flat at 2.3% y/y in April, unchanged for the second consecutive month. The wholesale food basket price index declined 8.4% m/m in the first 20 days of May, suggesting CPI inflation may ease. PPI deflation narrowed in April, falling 3.4% y/y, compared with the 4.3% drop in the previous month.
New yuan loans surprised on the downside in April at RMB555.6 billion, compared with RMB1.37 trillion in March. Total social financing also slowed to RMB751 billion in April, much lower than RMB2.34 trillion in the previous month.
The CNY weakened to 6.58 as of May 30 on the back of USD strength. FX reserves edged up slightly to USD3,219.7 trillion in April, suggesting capital outflow pressures are subdued.
In April, 65 of 70 cities saw rising home prices, compared with 62 the previous month. ANZ says it believes rising property prices will prompt some selective tightening measures, such as window guidance for property-related lending.  www.live.anz.com (ATI).