China April investment, retail sales growth slows but factory output strong

BEIJING (Reuters) - China reported weaker-than-expected investment and retail sales in April and a drop in home sales, clouding its economic outlook even as policymakers try to navigate debt risks and defuse a heated trade row with the United States.

Fixed asset investment grew the slowest since 1999 and the pace of retail sales softened to a four-month low, official data showed on Tuesday, suggesting a loss of momentum in the world's second-largest economy following generally soft readings in March.

The lone bright spot was industrial output, which jumped more than expected as the automobile sector rebounded and steel production surged.

Industrial output rose 7.0 percent in April, the National Bureau of Statistics said, beating analysts' estimates for a rise of 6.3 percent and up from a seven-month low of 6.0 percent in March.

The statistics bureau said Sino-U.S. trade frictions have yet to show an impact on China's economy.

But while April exports and imports were surprisingly solid, manufacturing surveys have pointed to a sharp weakening in new export order growth, possibly as companies grow more worried about being stuck with high inventories in case the U.S. and China do impose tariffs.

Analysts suspect some firms may also be rushing out shipments to beat any punitive trade measures, flattering export figures.

Washington and Beijing will resume high-level trade negotiations this week, after an initial round of talks earlier this month appeared to make little progress in narrowing their differences.[nL3N1SM04K]

SLOWING INVESTMENT

China's fixed-asset investment growth slowed to 7.0 percent in January-April from the same period a year earlier.

Analysts polled by Reuters had predicted growth of 7.4 percent, easing only slightly from January-March.

Private sector fixed-asset investment growth cooled to 8.4 percent in January-April, from 8.9 percent in the first three months.

Private investment accounts for about 60 percent of overall investment in China and has rebounded this year as growth in investment by heavily-indebted state firms slows.

Growth in infrastructure spending, a powerful economic driver last year, slowed to 12.4 percent in the first four months of the year.

Economists expect that softening trend to continue as Beijing forces local governments to scale back investment projects to contain their debt, and as property sales cool due to strict government controls on purchases to fight speculation and tame rising home prices. [nL3N1RT3PB]

China's real estate market, another major economic growth driver, also showed signs of fatigue, as many economists have been predicting.

While real estate investment softened slightly - growing at 10.3 percent in the first four months -- property sales continue to soften amid curbs on speculation and rising mortgage rates.

Property sales measured by floor area fell 4.1 percent in April from a year earlier, according to Reuters calculations, compared with a 3.2 percent rise in March.

For the first four months of the year, sales grew just 1.3 percent from the year-ago period, down from 3.6 percent in the first quarter of the year.[nL3N1SF3M4]

(Reporting by Kevin Yao and Cheng Fang; Writing by Elias Glenn; Editing by Kim Coghill)