Fig­ures show slow in­dus­trial growth

Econ­o­mists say re­duc­tion in 2015 GDP goal ap­pears in­creas­ingly likely

China Daily (Canada) - - BUSINESS - By CHEN JIA chen­jia1@chi­

In­dus­trial pro­duc­tion and fixed-as­set in­vest­ment growth con­tin­ued to soften in Oc­to­ber, which econ­o­mists said may now per­suade China’s top lead­ers to set a lower GDP growth tar­get for next year if mo­men­tum re­mains slug­gish. In­dus­trial out­put growth, a key in­di­ca­tor in GDP growth tar­gets, edged down to 7.7 per­cent year-on-year dur­ing the month, from 8 per­cent in Septem­ber, the sec­ond-low­est level this year, the Na­tional Bureau of Statis­tics said on Thurs­day.

Fixed-as­set in­vest­ment growth, another main driver of the world’s sec­ond-largest econ­omy, slowed to 15.9 per­cent for the first 10 months com­pared with16.1per­centintheJan­uary­tope­riod.

The NBS also re­leased fig­ures show­ing re­tail sales growth edged lower to 11.5 per­cent, from 11.6 per­cent in Septem­ber.

Ear­lier fig­ures from theNBS showed an Oc­to­ber man­u­fac­tur­ing Pur­chas­ing Man­agers In­dex read­ing of 50.8, down from 51.1 in Septem­ber, in­di­cat­ing weak­ened in­dus­trial pro­duc­tion and neworders.

Ex­perts said the lat­est fig­ures in­di­cate the econ­omy con­tin­ues to face down­side risks in the fourth quar­ter. Other re­cent data have shown slug­gish do­mes­tic de­mand, high fac­tory in­ven­to­ries and a gloomy prop­erty mar­ket.

There has been spec­u­la­tion re­cently that pol­i­cy­mak­ers may, at the Cen­tral Eco­nomic Work Con­fer­ence next month, ad­just next year’s GDP growth tar­get to 7 per­cent or even lower from this year’s 7.5 per­cent, while the 3.5 per­cent in­fla­tion tar­get is ex­pected to re­main un­changed.

“It would be wise to lower the tar­get to 7 per­cent, which may help achieve a more bal­anced and sus­tain­able pat­tern of growth, as well as deeper eco­nomic re­struc­tur­ing,” said Liu Ligang, chief economist in China at Aus­tralia and New Zealand Bank­ing Group Ltd.

To avoid any sud­den cool­ing in the econ­omy and con­trol ex­cess pro­duc­tion ca­pac­ity, the gov­ern­ment is likely to pre­fer tar­geted eas­ing mea­sures in the short term, in­stead of an im­me­di­ate pack­age of stim­u­lus mea­sures, econ­o­mists said.

The Na­tional De­vel­op­ment and Re­form Com­mis­sion re­cently ac­cel­er­ated its ap­proval of new in­vest­ment projects, which may help boost in­fra­struc­ture in­vest­ment growth

growth rate of re­tail sales in Oc­to­ber, down 0.1 per­cent­age

point fromSeptem­ber in the com­ing months.

The Peo­ple’s Bank of China, the coun­try’s cen­tral bank, also in­jected 770 bil­lion yuan ($126 bil­lion) into the com­mer­cial bank­ing sys­tem dur­ing Septem­ber and Oc­to­ber.

Wang Tao, chief economist in China with UBS AG, said she was wor­ried that the steeper de­cline in pro­ducer prices could put fur­ther stress on al­ready-frag­ile in­dus­trial de­mand.

“De­spite a ten­ta­tive sta­bi­liza­tion in con­di­tions, the fee­ble or­ganic growth mo­men­tum still needs ad­di­tional pol­icy support,” she said.

“Bolder moves in eas­ing, how­ever, may have to be con­sid­ered at the up­com­ing Cen­tral Eco­nomic Work Con­fer­ence in early De­cem­ber.”

LouisKuijs, chief economist at the Royal Bank of Scot­land Plc, said he ex­pects the gov­ern­ment’s eco­nomic re­sponse to re­main re­strained, given se­nior pol­i­cy­mak­ers have al­ready made it clear they would ac­cept GDP growth fall­ing be­low the gov­ern­ment’s tar­get of 7.5 per­cent this year, as long as the la­bor mar­ket holds up.

He fore­cast 7.3 per­cent GDP growth for this year, how­ever, and 7.2 per­cent for 2015.



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