BEIJING: China’s factory output and retail sales grew at a faster pace in August, but tumbling investment in the crisis-hit property sector threatens to undercut a flurry of support steps that are showing signs of stabilising parts of the wobbly economy.

Chinese policymakers are facing a daunting task in trying to revive growth following a brief post-COVID bounce in the wake of persistent weakness in the crucial property industry, a faltering currency and weak global demand for its manufactured goods.

Industrial output, released on Friday by the National Bureau of Statistics (NBS), rose 4.5% in August from a year earlier, accelerating from the 3.7% pace seen in July and beating expectations for a 3.9% increase in a Reuters poll of analysts. The growth marked the quickest pace since April.

Retail sales, a gauge of consumption, also increased at a faster 4.6% pace in August aided by the summer travel season, and was the quickest growth since May. That compared with a 2.5% increase in July, and an expected 3% increase.

The upbeat data suggest that a flurry of recent measures to shore up a faltering economy are starting to bear fruit.

Yet, a durable recovery is far from assured, analysts say, especially as confidence remains low in the embattled property sector and continues to be a major drag on growth.

“Despite signs of stabilisation in manufacturing and related investment, the deteriorating property investment will continue to pressure economic growth,” said Gary Ng, Natixis Asia Pacific senior economist.

The markets, however, showed relief at some of the better-than-expected indicators.

The Chinese yuan touched two-week highs against the dollar, while the blue-chip CSI 300 Index was up 0.2% and Hong Kong’s Hang Seng Index climbed 1% in early morning trade.

Further aiding sentiment, separate commodities data showed China’s primary aluminium output hit a record-monthly high in August while oil refinery throughput also rose to a record.

Friday’s data followed better-than-expected bank lending figures, narrowing in the declines of exports and imports as well as easing deflationary pressure.

The country’s passenger vehicle sales also returned to growth in August from a year earlier, as deeper discounts and tax breaks for electric vehicles boosted consumer sentiment.

To sustain the recovery momentum, China’s central bank said on Thursday it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity. Earlier in the day, the bank also rolled over maturing medium-term policy loans to inject more liquidity into the financial system.—Reuters