GROWTH in China’s factory output, investment and retail sales were all weaker than expected in July, adding pressure on the government to roll out more measures to prevent a deeper slowdown, days after it shocked markets by devaluing its currency.

    While the central bank said yesterday it would not let the yuan slide too far, the devaluation came days after data showed a hefty drop in exports and producer prices, which clearly weighed on Chinese manufacturers last month.

    Nearly all data released for July was weaker than economists had forecast, pointing to further deterioration in the world’s second-largest economy. Data for June had fueled some hopes that activity was stabilizing after policymakers unleashed the biggest burst of stimulus since the global financial crisis.

    “This kind of data will only accentuate the negative outlook that everyone has about the economy,” said Louis Kuijs, China economist at Royal Bank of Scotland in Hong Kong.

    Factory output rose 6.0 percent in July from a year earlier, slowing from June’s 6.8 percent rise and hitting a three-month low. Economists had expected a 6.6 percent rise.

    Fixed-asset investment, a crucial driver of the world’s second-largest economy, also disappointed, rising 11.2 percent in the first seven months compared with the year-ago period, the weakest pace in nearly 15 years, the National Bureau of Statistics showed yesterday.

    Markets had expected an 11.5 percent rise, which would have been a slight improvement from June and put the outlook for the second-half of the year on somewhat more solid footing.

    Property investment growth cooled to 4.3 percent, the weakest since March 2009, despite a pick-up in housing sales.

    Retail sales rose 10.5 percent in July from the same time last year, slightly below forecasts for 10.6 percent growth, which would have been even with June’s reading. Auto sales fell 7.1 percent even as carmakers slashed prices and offered sweeter incentives.

    The sluggish activity figures followed disappointing trade and inflation readings earlier this month that showed persistent weakness in the economy despite repeated stimulus measures.

    The central bank has repeatedly cut interest rates and banks’ reserve requirement to boost credit and lower borrowing costs, and further policy easing is widely expected to avert a sharper slowdown.

    If conditions do not improve soon, growth could fall below 6.5 percent in the current quarter, from 7 percent in the second quarter, ANZ economists said.

    On Tuesday, the People’s Bank of China shocked global markets by devaluing the yuan by nearly 2 percent, a move it said as a free-market reform but which some suspect could be the beginning of an engineered, longer-term depreciation of the exchange rate to boost ailing exports.

    The yuan fell further yesterday, taking its two-day losses to more than 4 percent at one point.

    Regardless of the government’s motives for the currency policy u-turn, analysts said the decline in the yuan so far was too mild to spur global demand for Chinese goods.

    If the devaluation was a one-off move, economists at OCBC believe the government’s next step may be to widen the yuan’s allowable trading band and cut banks’ reserve requirements further to offset the impact of capital flowing out of the country.(SD-Agencies)