BEIJING: China’s industrial output expanded at its slowest pace in three months in November, official data showed Friday (Dec 12), with other key indicators also pointing to weakness in the world’s second-largest economy.
The data came after a key annual meeting this week where China’s top leaders stressed the need to adapt to the economy’s “new normal” – an increasingly popular official expression for slower but more sustainable growth.
Figures from the National Bureau of Statistics (NBS) showed that industrial production, which measures output at factories, workshops and mines, rose 7.2 percent year-on-year last month, the weakest since August’s 6.9 percent.
Retail sales, a key indicator of consumer spending, increased 11.7 percent in the same month, the NBS said, while fixed asset investment, a measure of government spending on infrastructure, expanded 15.8 percent on-year in the first 11 months – the lowest since growth of 13.7 percent for the full year of 2001.
The industrial output figure missed market expectations of 7.5 percent but retail sales came in just ahead of the median forecast of 11.6 percent in a Wall Street Journal poll of 16 economists, while fixed-asset investment matched predictions.
“The overall profile of activity indicators remained weak in November,” ANZ analysts Liu Ligang and Zhou Hao said in a research note, adding they posed “challenges” to the official 7.5 percent target for gross domestic product (GDP) growth this year.
The figures are the latest signs that the Chinese economy, a key driver of global growth, is under downward pressures, and come with Beijing expected to lower next year’s expansion goal.
The country has also been hit by disappointing manufacturing activity, tumbling property prices and nagging concerns over corporate and local government debt.
RECENT WEAKNESS
Policy makers at the Central Economic Work Conference, which closed on Thursday, are believed to have set growth and inflation targets for next year, although the official announcement of the goals is reserved for the national parliament opening in March.
“We must take the initiative to adapt to the new normal in economic development, keep the economy operating in a reasonable range, and (elevate) structural reform to an even more important position,” according to a meeting statement released by the official Xinhua news agency.
President Xi Jinping and other top leaders have said they want to put China’s increasingly affluent consumers at the centre of the economy, rather than investment and exports. They say they are ready to tolerate slower expansion to achieve more sustainable growth.
Analysts expect Beijing to lower the 2015 target to 7.0 percent, which would be the lowest since 2004. China last cut the target in 2012 to 7.5 percent from 8.0 percent.
Julian Evans-Pritchard, an economist with research firm Capital Economics, said in a report that authorities “appear to be taking a relatively sanguine view about this recent weakness”, noting that they were placing emphasis on growth quality over speed.
“We continue to believe that policy makers will mostly allow the structural slowdown in investment in sectors with oversupply, such a real estate, to run its course, particularly given that both employment and consumption growth appear healthy,” he said.
China’s economy grew 7.3 percent in the third quarter, worse than the 7.5 percent in the previous three months and the slowest since 2009 at the height of the global financial crisis. The data follow other figures suggesting a softening in Chinese growth.
On Monday, official figures showed that November export growth slowed sharply while imports fell unexpectedly, resulting in a record monthly trade surplus.
The NBS said on Wednesday that China’s consumer price index (CPI), a key gauge of inflation, rose 1.4 percent, a five-year low. It added that the producer price index (PPI), a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI, fell 2.7 percent year-on-year, the worst reading in 17 months.