(Yicai) Aug. 18 -- China's economic indicators broadly softened and fell short of expectations last month amid high temperatures, heavy rainfall, and geopolitical conflicts, though the economy remained steady and new growth engines moved it further toward higher-quality growth.

Industrial production climbed 4.5 percent in July from a year earlier, slowing from a 5.3 percent increase in the previous month, according to data released by the National Bureau of Statistics yesterday. Retail sales of consumer goods rose 0.6 percent, compared with 1 percent in June.

Fixed-assets investment, excluding rural households, fell 6.7 percent in the January to July period from a year ago, widening from a 5.7 percent year-on-year drop in the first half of the year.

All three gauges came in below forecasts. Chief economists polled by Yicai had expected an increase of 4.8 percent in industrial output and 1.6 percent in consumer goods sales, along with a 5.9 percent drop in fixed-asset investment.

Extreme weather triggered natural disasters and had some impact on economic activity, though the impact was generally manageable and did not alter the broader economic development trend, Fu Linghui, a spokesperson for the NBS, said at a press conference held by the State Council Information Office yesterday.

The economy is expected to keep on a stable, innovation-led, and high-quality trajectory -- lending solid support for meeting the country's annual growth target of 4.5 percent to 5 percent -- as new growth drivers take on a larger role, reform and opening-up deepens, and economic policies become more effective, Fu stressed.

Typhoons, torrential rains, and heatwaves weighed on offline consumption in some regions, said Wang Guanhua, NBS spokesperson and deputy director-general of the national economic comprehensive statistics department. Service consumption has proven relatively resilient in recent years, consistently outpacing that of goods for growth, Wang pointed out.

The summer consumption boom has taken shape, noted Wen Bin, chief economist at China Minsheng Bank, adding that rising spending on leisure, entertainment, and travel has lifted service consumption growth.

Yet spending on goods, such as autos and household items, has slowed due to fading policy effects and changing consumption patterns, dragging down overall retail sales growth, with consumer spending also constrained by weak household purchasing power and the consumer’s willingness to spend, Wen pointed out.

While industrial output growth eased, the contribution of new growth engines to industrial activity increased. Preliminary estimates show that new growth sectors represented by high-tech and digital product manufacturing accounted for about half of the growth in industrial production in the January to July period, up around 3 points from the first half, with their leading role steadily strengthening.

Competing forces will shape industrial production, with positive tailwinds from new growth drivers and stepped-up policy support, versus headwinds from sluggish domestic demand, moderating export growth, and elevated costs, Wu Chaoming, chief economist at CSC Financial Holding, told Yicai. Annual industrial production will likely grow by almost 5.5 percent, he added.

With a lower comparative base and diminishing disruption from extreme weather, year-on-year growth in industrial output is likely to rebound to around 4.8 percent this month, according to Wang Qing, chief macro analyst at Orient Jincheng Credit Rating. Looking ahead, even as exports may lose steam, China's pro-growth policies are set to shore up domestic demand as a counterweight, Wang said to Yicai.

Industrial production is likely to stay within the 4.5 percent to 5.5 percent growth range, with high-tech industries poised to maintain a double-digit expansion and continue to act as a key engine, Wang added.

The quickening decline in investment growth since the start of the year has drawn keen market attention. The investment landscape should not be judged solely by changes in growth drivers, Fu said. More attention should be paid to the role of Investment in helping economic transformation, strengthening infrastructure, and improving people's livelihoods, Fu noted.

Going forward, the Chinese authorities will align investment in physical assets with human capital, leveraging the guiding and driving role of government investment, stimulating private investment, pushing forward major strategies and key, high-standard projects, and boosting spending on innovation and public welfare to foster favorable conditions for high-quality economic development.

Editor: Martin Kadiev