China's factory output growth declines

AP News
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Posted: Dec 12, 2014 4:24 AM

BEIJING (AP) — Growth in China's factory output declined further in November in a new sign of weakness in the world's second-largest economy.

Industrial production rose by 7.2 percent over a year earlier, government data showed Friday. That was down from October's 7.7 percent growth and September's 8 percent rate.

The report came after Chinese leaders at an annual planning meeting affirmed their commitment to the "new normal" of slower growth as they try to steer China toward a more sustainable expansion based on domestic consumption.

Economic growth fell last quarter to a five-year low of 7.3 percent, below the official full-year target of 7.5 percent. Imports contracted unexpectedly in November in a sign of anemic domestic demand.

Communist leaders have expressed confidence they can manage the slowdown. But they cut interest rates unexpectedly Nov. 22 in a sign they worried growth was falling too sharply. Analysts say the economy could take several months to rebound.

"Overall, there is no sign of a quick reversal of the growth downtrend," said Citigroup economists Shuang Ding and Minggao Shen in a report.

Economic growth might fall to 7.1 percent in the current quarter and below 7 percent early next year, Ding and Shen said.

Also Friday, government data showed growth in investment in factories and other fixed assets slowed slightly to 15.8 percent for the first 11 months of the year over the same period a year earlier. The rate for the first 10 months was 15.9 percent.

"Officials seem willing to allow investment to cool further, as long as employment and consumer spending remain strong," said Julian Evans-Pritchard of Capital Economics in a report.

The statement following the planning meeting led by President Xi Jinping that ended Thursday gave no growth target for next year. But private sector analysts expect it to be reduced to about 7 percent.

The announcement listed five goals, including keeping the economy stable and finding new sources of growth, making industry more efficient, speeding up agricultural development and raising incomes. It warned China faces "downward pressure" on growth due to weak global demand and "increasing difficulties for business."

China must "understand the new normal, adjust to the new normal and develop under the new normal," said the statement.

The leadership under Xi has promised to give market forces and entrepreneurs a bigger role in the state-dominated economy and to open more industries to private competition.

Analysts expect reforms over the coming year to focus on reducing excess production capacity in industries including steel and overhauling energy policy to promote conservation.

Chinese leaders also will need to wrestle with heavy debts owed by local governments and state companies that have prompted unease about the health of the state-owned banking system.