CHINA ECON­OMY COOLS AGAIN

Coun­try’s fac­tory out­put, re­tail sales miss es­ti­mates

The Gulf Today - Business - - FRONTPAGE -

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

Bei­jing 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 on Tues­day pointed to mod­er­at­ing growth over the next few quar­ters as credit ex­pan­sion slows, with year-on-year in­dus­trial out­put gain of 6.2 per cent in Oc­to­ber miss­ing an­a­lysts’ es­ti­mates of a 6.3 per cent rise, and be­low a 6.6 per cent in­crease in Septem­ber. Fixed-as­set in­vest­ment growth slowed to 7.3 per cent in the Jan­uary-oc­to­ber pe­riod, the Na­tional Bureau of Statis­tics (NBS) said. An­a­lysts had ex­pected an in­crease of 7.4 per cent.

“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.

China’s econ­omy has sur­prised fi­nan­cial mar­kets with ro­bust growth of nearly 6.9 per cent 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.

That has sup­ported the world econ­omy as the Asian gi­ant has con­tin­ued to hoover up com­modi­ties and con­sumer goods, help­ing to stoke un­der­ly­ing global de­mand for cars and smart­phones to TVS and in­dus­trial prod­ucts.

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

China’s ex­ports and im­port growth both eased in Oc­to­ber, while the smog war dragged on man­u­fac­tur­ing ac­tiv­ity last month. To be sure, data has yet to point to any marked de­cel­er­a­tion in eco­nomic growth, and an­a­lysts see only a mod­est loss of mo­men­tum over the next few months.

In­deed, China’s pro­ducer prices were sur­pris­ingly strong in Oc­to­ber, de­spite muted ac­tiv­ity dur­ing the golden week hol­i­day.

Prof­its for the coun­try’s in­dus­trial pow­er­houses surged 27.7 per cent in Septem­ber, the most in nearly six years, as en­vi­ron­men­tal in­spec­tions and the start of plant clo­sures in smog-blighted north­ern prov­inces sparked fears of sup­ply short­ages and sent prices of fin­ished goods like steel and cop­per sharply higher.

Reuters

Em­ploy­ees scan boxes and parcels at a lo­gis­tic cen­tre in Harbin, China, on Tues­day.

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