Economy cools amid govt curbs
Slowdown seen in manufacturing, property sector
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 Jan- uary-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.