Recent Chinese Data Points to Economic Slowdown

The iShares FTSE/Xinhua China 25 Index ETF (NYSE:FXI) is on watch today, after several worse-than-expected Chinese economic data points were released in the early morning hours.

While retail sales and industrial production rose on a year-over-year basis, both were below analyst expectations. Moreover, fixed asset investment plunged to its slowest pace in over sixteen years.

As China struggles with rising debt, the country’s regulators face a dilemma on how exactly to spur growth. More cheap credit could eventually cause a debt crisis, so the government is experimenting with some bizarre policies to try and stabilize failing businesses.

Here are the numbers just released:

• China’s July Industrial Production rose 6.0% year-over-year, missing consensus views for 6.1%, and below last quarter’s 6.2%.
• China’s July Fixed Asset Investment rose 8.1% year-over-year, missing consensus estimates for 8.8%, and down from the prior month’s 9.0% pace.
• China’s July Retail Sales rose 10.2% year-over-year, missing consensus views for 10.5%, and down from the prior month’s 10.6% rate.

The FXI, which is the largest ETF focusing on China equities, rose $0.04 (+0.11%) to $37.08 per share in premarket trading Friday. FXI has gained nearly 5% year-to-date.

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