China industrial output slows sharply in July

BEIJING: China’s industrial output, a key engine of growth, slowed sharply in July as government efforts to rein in debt weighed on demand and economic activity, official data showed yesterday.

The figures come as the authorities have sought to tighten regulations to tame debt as well as reduce excess capacity left over from massive governmentbacked infrastructure spending at the height of the global financial crisis.

Output by Chinese factories and workshops grew by a lowerthan- expected 6.4 per cent compared to the same month last year, the national statistics bureau said.

Economists surveyed by Bloomberg News had expected growth of 7.1 per cent for July after industrial production expanded by 7.6 per cent in June.

Retail sales, meanwhile, slowed slightly to 10.4 per cent last month, compared to 11 per cent in June, while fixed asset investment posted 8.3 per cent growth in the January-July period – both slightly below expectations.

“In general, the national economy was generally steady in July with continued positive momentum and deepening structural reform,” national statistics bureau spokesman Mao Shengyong said at a news conference.

“But we also see that the international circumstance is still complicated and fluid, domestic structural conflicts still stand out, and there are still a lot of hidden concerns.”

Mao said industrial production was affected by the weather – high temperatures and floods – and efforts in some regions to speed up the reduction of excess capacity that does not meet environmental rules.

Economic growth could slow by up to 0.2 percentage points in the second half of the year, Mao said.

While China has posted betterthan-expected second quarter growth of 6.9 per cent, economic analysts have warned that the momentum will not last as authorities clamp down on debt.

Property development investment eased between January and July, signalling that the government’s tightening policies “have finally trickled down through the economy,” according to ANZ Research in Hong Kong.

Julian Evans-Pritchard, China economist at Capital Economics, said Monday’s figures provided “mixed signals” as growth in electricity and steel output accelerated while production of consumer goods and most other commodities slowed. — AFP