BEIJING (dpa-AFX) - China's growth imbalances worsened as K-shaped divergence continued to widen and risks to the growth outlook remain balanced to the downside with slowing domestic activity, ING economist Lynn Song said.
Official data released on Monday showed that industrial output grew at a slower pace of 4.5 percent in July after expanding 5.3 percent in June. Retail sales rose only 0.6 percent, weaker than the 1.0 percent gain in June.
Fixed asset investment shrank 6.7 percent in January to July, following a decline of 5.7 percent in six months to June, the National Bureau of Statistics reported.
Although the statistical office attributed weather effects for the miss, but data has generally been soft since the second quarter, the economist noted.
The economist pointed out that weak consumer confidence and the lingering effects of previously front-loaded consumption through trade-in policies continued to drag retail sales growth.
Although boosting consumption was government's medium-term goal, resources continue to be concentrated in the tech race rather than stimulating domestic consumption, Song observed.
Further, the economist said China's industrial growth is increasingly being driven by industrial upgrading and high-tech manufacturing, which align with the country's strategic priorities.
Song said that the July Politburo meeting underscored a goal to accelerate the pace of fiscal expenditures and the use of bond proceeds. This could signal faster project approvals in the second half of the year and boost investment.
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