China continues to be stuck in an economic rut, new data released on Wednesday suggested, as a number of key activity indicators painted a discouraging picture of the state of the world’s second-largest economy.
Industrial production fell to a six-month low in October, the National Bureau of Statistics (NBS) reported, with output at factories, workshops and mines increasing just 5.6 percent compared with a year ago, and edging down from 5.7 percent in September. This was lower than analysts had expected.
Investment figures followed the same trajectory, the data showed, dropping from a 10.3-percent average from January-September to 10.2 percent in October.
The only real highlight was retail sales, which jumped a better-than-expected 11 percent, up from 10.9 percent the month before.
Recession fears
The disappointing figures come amid mounting international concern over China’s poor economic performance. On Monday, the Organisation for Economic Co-operation and Development (OECD) warned that the knock-on effects were both serious and far-reaching, and that the downward spiral, unless curbed, could drag the global economy into another recession.
The slowdown is largely the result of Beijing’s attempt to transform the country’s growth model to a slower but more sustainable, consumption-driven one, following more than two decades of astronomical growth. However, the transition to the “new normal” is proving bumpy, and the government has rolled out several stimulus measures throughout the year to counter the downtrend.
‘Not encouraging’
Despite some early signs that the intervention is working, many experts expect the slump to continue for the foreseeable future, due in part to overcapacity in manufacturing, a weakening property market and mounting local government debt.
“The industrial economy is still facing downward pressures looking forward,” the NBS admitted in a statement on Wednesday.
Zhou Hao, a senior emerging markets economist at Commerzbank in Singapore, also called the data a cause of concern.
“In general, the data is not encouraging, albeit stabilizing somewhat. The manufacturing sector is slowing significantly due to sluggish demand,” Zhou said.
Louis Kujis, an Oxford Economics analyst, predicted Wednesday’s report would trigger calls for additional stimulus.
“Despite some positive signs and policy easing already undertaken, growth is likely to soften more into 2016,” Kuijs said in a note.
“We expect the government to continue to take additional incremental measures to support domestic demand to ensure that growth does not deviate too much from its targets.”
Confidence despite bad news
Wednesday’s mixed results were just the latest in a string of disappointing figures released this week.
NBS data published Tuesday showed consumer inflation slowed more than expected in October, while producer prices extended their decline to a 44th straight month. October trade figures fared even worse, widely missing forecasts as exports fell 6.9 percent and imports tumbled 18.8 percent.
Despite the tepid numbers, a vice finance minister assured reporters on Tuesday that Beijing was confident of achieving economic growth of around 7 percent this year – the slowest pace of expansion in a quarter of a century.
pad/hg (AFP, Reuters)
