chinese output growth slows to 5 year low
Last Updated : GMT 16:22:18
Arab Today, arab today
Arab Today, arab today

Chinese output growth slows to 5 year low

Arab Today, arab today

Arab Today, arab today Chinese output growth slows to 5 year low

Workers are seen at a glass factory in Zhuzhou
Beijing - AFP

 China's industrial production growth slowed sharply in August to its lowest level for more than five years at 6.9 percent, official data showed Saturday, intensifying concerns for the world's second-largest economy.
The key indicator, which measures output at factories, workshops and mines, slumped from a 9.0 percent year-on-year expansion in July and was the worst since 5.7 percent in December 2008, during the global financial crisis.
It also fell far short of the 8.7 percent median increase in a survey of 15 economists by The Wall Street Journal.
The abrupt slowdown and other data released Saturday are certain to compound growing worries over the strength of China's economy -- a key driver of world commerce -- following recent indicators suggesting growth is weakening even after authorities took limited stimulatory measures.
Retail sales, a key indicator of consumer spending, rose 11.9 percent in the same month on-year, the National Bureau of Statistics (NBS) said -- also down from 12.2 percent in July.
Fixed asset investment, a measure of government spending on infrastructure, expanded 16.5 percent on-year in the first eight months of 2014. The figure is only released as a cumulative change.
It was below the 17.0 percent reading for the first seven months of the year, and also below the 16.9 percent forecast.
China's Communist Party government is targeting expansion of about 7.5 percent in gross domestic product (GDP) this year, the same as last year's objective, as it tries to steer the country's growth model towards consumer spending and away from the export- and investment-fuelled double-digit economic expansion regime of the past.
ANZ Bank economists Liu Li-Gang and Zhou Hao said that the August data put the government's scenario in danger and showed the need for prompt action.
"Past experience suggests that China needs to maintain around 9.0 percent industrial production growth to deliver 7.5 percent GDP growth," they wrote in an analysis.
"In our view, short of outright policy easing, China will likely miss the 7.5 percent growth target this year, and a sharp economic slowdown will endanger the undergoing structural reforms," they added.
"Chinese authorities should further relax monetary policy as soon as possible to prevent the growth momentum from decelerating further."
How they will react, however, is unclear.
Premier Li Keqiang, addressing a World Economic Forum meeting in China on Wednesday, appeared far from concerned.
"When observing the Chinese economy, one should not just focus on its short-term performance or the performance of a particular sector," he said.
"Rather, one should look at the overall trend, the bigger picture and the total score."- Property problems -
Since April, authorities have deployed measures to boost growth, including small business tax breaks, targeted infrastructure spending and incentives to spur lending in rural areas and to small companies.
NBS data released Thursday showed that inflation eased to a four-month low of 2.0 percent in August, leaving leaders with room to take further stimulatory steps.
Li stressed that the government has chosen not to adopt "strong economic stimulus or easing monetary policy", focussing instead on reforms and readjustments.
But he also said that authorities have unused ammunition in the form of "a full range of tools of macro-control at our disposal".
He did not elaborate, but possible steps include lowering requirements for how much cash banks must keep on hand, aimed at spurring lending, and cutting interest rates to reduce borrowing costs.
China's GDP grew at a higher-than-expected 7.5 percent in the second quarter from 7.4 percent in the first three months of the year, which was the worst since a similar 7.4 percent result in July-September 2012.
Recent concerns have centred on fallout for the economy from a potentially damaging knockdown in China's huge property sector, where new home prices have fallen for four straight months, as well as waning effects from limited doses of government stimulus.
A plunge in bank lending in July had also raised fears of slowing economic growth, though figures for August showed a strong rebound to what analysts described as approaching a normal level.
Chinese banks granted 702.5 billion yuan ($114.5 billion) in new loans last month, the People's Bank of China said Friday, nearly twice July's 385.2 billion yuan though still below June's 1.08 trillion yuan and lower than the amount recorded in August 2013.

 

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