China’s economy lost further momentum in October, with factory growth dipping and investment growth hitting a near 13-year low, testing the government’s resolve to avoid stronger stimulus measures.
The soft performance cemented the view that China is on track to grow at its weakest pace in 24 years. But leaders remain reluctant to use full-blown policy easing, such as cutting interest rates.
Fixed-asset investment, an important driver of growth, grew 15.9 percent in the first 10 months of the year from a year ago, the National Bureau of Statistics said on Thursday. That was the weakest pace since December 2001.
October factory output rose 7.7 percent, which was higher that August’s 6.9 percent but below forecasts and the second weakest pace since the height of the global financial crisis.
November’s reading could be weaker still, as many factories in northern China shut early in the month to reduce air pollution as Asia-Pacific leaders met in Beijing.
“All three activity indicators weakened moderately, suggesting the downward trend in GDP growth has not been arrested yet. I would expect growth to be lower in the fourth quarter than in the third quarter,” said Shuang Ding, an economist at Citi in Hong Kong.
He said industrial production of 7.7 percent roughly corresponded to economic growth of 7.1 percent.
Despite a raft of stimulus measures, China’s growth slowed to 7.3 percent in the third quarter, the weakest since the global financial crisis.
October retail sales growth eased to 11.5 percent, the slowest pace since early 2006.
The anti-corruption drive spearheaded by President Xi Jinping has hit sales of luxury goods and expensive dining and also cooled down a craze among local governments to launch new investment projects.
Economists polled by Reuters had forecast retail sales and industrial output to rise 11.6 percent and 8.0 percent, while fixed asset investment was seen up 15.9 percent. (Reuters)