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Recent economic growth data from China isn't good and could even get worse.
An unexpected slowdown in industrial-output and investment growth plus a decline in home sales could conceivably lead Beijing to enter into another round of massive economic stimulus, a step it has repeatedly said it isn't considering.
Fixed-asset investment rose 17.3 percent in the first four months, the slowest for the period since 2001 while home sales dropped 9.9 percent, said the National Bureau of Statistics. Factory production rose 8.7 percent in April on-year but was lower than the 8.8 percent increase in March and the slowest since 2009. The value of homes sold fell 18 percent in April from March.
Economists believe the more modest growth results indicate that risks are increasing and that China will definitely miss the year's GDP growth target of 7.5 percent. They noted Beijing's efforts to curb the slowdown have not borne fruit and are being made more difficult.
They estimate that if China wants to keep the economy's growth rate 7.5 percent, the next step will definitely be a substantial easing in monetary policy, a step that has been long in coming, but which Beijing has rejected.
Economists expect the People's Bank of China, the central bank, to order an across-the-board cut in banks' reserve-requirement ratio by the end of June.
The government in April implemented tax breaks and accelerated infrastructure and social housing spending to sustain growth. Economists forecast GDP growing by 7.3 percent in 2014, the slowest in 24 years.
Chinese President Xi Jinping said the Chinese must get used to slower economic growth in the face of a vastly changed internal and external economic environment.
As a result, the government is moving away from an economic model founded on high export growth and government stimulus spending and into a new one where self-sustaining growth will be driven by consumer spending.
"We must boost our confidence, adapt to the new normal condition based on the characteristics of China's economic growth in the current phase and stay cool-minded," Xi said.
