KUALA LUMPUR, Sept 13 – China’s industrial production growth slowed sharply to 6.9% in August, its lowest level for more than five years, official data for the world’s second-largest economy showed today. The figure, which measures output at factories, workshops and mines, marked an abrupt slowdown from the 9% year-on-year expansion recorded in July and was the worst since 5.7% in December 2008, during the global financial crisis. It also fell far short of the 8.7% median increase in a survey of 15 economists by The Wall Street Journal.
The result and other data released Saturday are certain to compound growing concerns 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% in the same month on-year, the National Bureau of Statistics (NBS) said – also down from 12.2% in July. Fixed asset investment, a measure of government spending on infrastructure, expanded 16.5% on-year in the first eight months of 2014. The figure is only released as a cumulative total.
It was below the 17% reading for the first seven months of the year, and also below the 16.9% forecast. China’s Communist government is targeting expansion of about 7.5% 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. China’s GDP grew at a higher-than-expected 7.5% in the second quarter from 7.4% in the first three months of the year, which was the worst since a similar 7.4% result in July-September 2012.
Recent concerns have centred on fallout for the economy from a potential 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 (RM365.2 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.
Premier Li Keqiang, addressing a World Economic Forum meeting in China on Wednesday, expressed overall satisfaction with the country’s economic performance. “Instead of adopting strong economic stimulus or easing monetary policy, we have vigorously promoted reform and economic readjustment, and made efforts to improve people’s lives,” he said. “As a result, we have maintained steady economic performance.” 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% in August, leaving leaders with room to take further stimulatory steps. Li himself suggested that the government has unused ammunition in the form of “a full range of tools of macro-control at our disposal”.