Weak Data From China Suggest Policy Response May Be Needed

BEIJING — More signs that the Chinese economy stuttered unexpectedly in April emerged Friday, with lower-than-expected output data, softening retail sales and easing prices all suggesting that rising economic difficulties could require robust policy responses from Beijing.

Chinese industrial output expanded last month at its slowest annual pace in nearly three years, while fixed-asset investment growth dipped to its lowest in almost a decade.

The weak growth signaled that the effects of a prolonged credit crunch in the Chinese real estate sector, and of flagging demand from important export markets like Europe and the United States, was more severe than first thought.

Other figures released Friday showed that new Chinese bank loans in April had been well below what most economists had expected, helping explain the continued tight credit conditions for businesses and developers despite the gentle easing espoused by officials in Beijing.

The weakness in global economic conditions was further underlined by India, where industrial output data for March showed a 3.5 percent drop compared with the same period a year earlier.

The Australian dollar, which trades as a proxy for Chinese growth expectations, fell to the lowest in nearly five months on the China data. The Hong Kong, Shanghai and Tokyo stock markets all slipped.

“This increases the pressure for policy stimulus, both fiscal and monetary,” said Dariusz Kowalczyk, economist at Credit Agricole CIB in Hong Kong. “In particular given lower inflation, we believe that there is room for, and need for, such policy easing.”

China’s annual consumer inflation moderated to 3.4 percent in April from 3.6 percent in March, while food prices — which are of greatest concern to China’s people and policy makers — rose 7 percent, compared with 7.5 percent in March. Easing inflation potentially gives Beijing more scope to loosen policy to help the economy rebound from a first-quarter slowdown in growth.

Industrial production rose 9.3 percent in April, the lowest level since May 2009, while retail sales growth slowed to 14.1 percent, the weakest in 14 months.

Growth in electricity output, considered a particularly accurate measure of the real economy, slowed to less than 1 percent.

Chinese banks made 681.8 billion renminbi, or $108 billion, in new loans in April, well below forecasts of 800 billion renminbi.

Beijing has been “fine-tuning” monetary and fiscal policy since last autumn, when a softening of demand from the European Union — China’s biggest export market — and the effects of domestic policy tightening had left companies struggling. But as Asia’s biggest economy endeavors to regain upward momentum, analysts say the time for more robust action may be drawing near.