Econ­omy cools amid govt curbs

Slow­down seen in man­u­fac­tur­ing, prop­erty sec­tor

Global Times - - Front Page -

China’s econ­omy cooled fur­ther last month, with in­dus­trial out­put, fixedas­sets in­vest­ment and re­tail sales miss­ing ex­pec­ta­tions as the gov­ern­ment ex­tended a crack­down on debt risks and fac­tory pol­lu­tion.

The coun­try is al­ready in the sec­ond year of a cam­paign to re­duce high lev­els of debt as au­thor­i­ties worry that riskier lend­ing prac­tices, es­pe­cially in the real es­tate sec­tor, could im­peril the econ­omy.

Data re­leased on Tues­day sug­gested that pol­i­cy­mak­ers are mak­ing progress in de­fus­ing fi­nan­cial risks by wean­ing China off its years-long ad­dic­tion to cheap credit, and sig­naled mod­er­at­ing growth over the next few quar­ters.

In­dus­trial out­put rose 6.2 per­cent year-on-year in Oc­to­ber, the Na­tional Bureau of Statis­tics (NBS) said, miss­ing an­a­lysts’ es­ti­mates of a 6.3 per­cent gain and lag­ging a 6.6 per­cent in­crease in Septem­ber.

Fixed-as­sets in­vest­ment growth also slowed to 7.3 per­cent in the Jan­uary-Oc­to­ber pe­riod, down from 7.5 per­cent in the first nine months.

“The mod­er­a­tion in ac­tiv­ity data re­leased today sug­gests that growth slowed in Oc­to­ber and adds to our con­vic­tion that it will con­tinue to do so in the quar­ters ahead,” No­mura an­a­lysts wrote in a note to clients.

In the prop­erty sec­tor, where au­thor­i­ties have tight­ened rules to flush out spec­u­la­tive fi­nanc­ing that has helped drive a two-year boom, sales and new con­struc­tion starts fell in Oc­to­ber. Prop­erty in­vest­ment growth also cooled to 5.6 per­cent in Oc­to­ber year-on-year, from 9.2 per­cent in Septem­ber, Reuters cal­cu­lated.

“I think this [slow­down in real es­tate] is ex­actly what the gov­ern­ment is look­ing to do. I don’t see them chang­ing their pol­icy course,” said Jonas Short at in­vest­ment bank Sun Hung Kai Fi­nan­cial.

China’s econ­omy has sur­prised fi­nan­cial mar­kets with ro­bust growth of nearly 6.9 per­cent in the first nine months of this year, un­der­pinned by a re­cov­ery in its man­u­fac­tur­ing and in­dus­trial sec­tors thanks to a gov­ern­ment-led in­fra­struc­ture spend­ing spree, a re­silient prop­erty mar­ket and un­ex­pected strength in ex­ports.

And the over­all pic­ture backs the con­sen­sus view that the econ­omy is en­ter­ing a pe­riod of mod­er­a­tion rather than a rapid de­cel­er­a­tion. China’s pro­ducer prices, for in­stance, were sur­pris­ingly strong in Oc­to­ber.

Since the third quar­ter, the world’s sec­ond-largest econ­omy has started to show signs of fa­tigue, with mo­men­tum seen slack­en­ing fur­ther as the gov­ern­ment’s crack­down on debt risks curbs de­mand and tighter pol­lu­tion rules hits fac­tory out­put.

China’s ex­ports and im­port growth both eased last month, while the smog war dragged on man­u­fac­tur­ing ac­tiv­ity and pulled av­er­age daily crude steel out­put down for a sec­ond straight month in Oc­to­ber

The lat­est data also showed con­sumers might be tight­en­ing their purse strings.

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