Bloomberg’s gross domestic product tracker came in at 6.78 percent year-on-year in November, down from 6.91 percent in October and a fourth month below 7 percent, according to a preliminary reading. Factory production rose 7.2 percent from a year earlier, retail sales gained 11.7 percent, and investment in fixed assets expanded 15.8 percent in January through November from a year earlier, official data showed.
The government ordered some factories to close in Beijing and surrounding provinces during the Asia-Pacific Economic Cooperation forum in early November to curb pollution. China’s central bank cut benchmark interest rates last month as a property slump weighs on the world’s second-biggest economy.
“The major reason for the slowdown is weak demand,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “Both external and internal demand are relatively weak.”
Ding said he expects factory production will continue to slow in the first quarter of next year, while a gauge of manufacturing activity will fall below the 50 expansion-contraction line, prompting the central bank to cut banks’ required reserve ratios.
The Shanghai Composite Index (SHCOMP), which surged about 18 percent since the central bank announced on Nov. 21 it was cutting lending and deposit rates, was up 0.4 percent at 2:35 p.m. in Hong Kong.
The data adds to evidence of weakness in China’s economy,” Bloomberg’s Beijing-based economist Tom Orlik wrote in a note. “The People’s Bank of China’s hands may be tied by the speculative surge on the mainland’s equity markets. Fear of adding further fuel to the fire appears to have constrained the PB0C to return to targeted measures, at least temporarily.”
The PBOC this week injected 400 billion yuan ($65 billion) into the banking system, according to a person familiar with the matter. The latest injection and the stock market gains may signal that an RRR cut is less likely this month, according to Shen Jianguang, Hong Kong-based chief Asia economist at Mizuho Securities Asia Ltd.
China’s economy is showing resilience and potential even as it slows, giving the government plenty of room to maneuver, the official Xinhua News Agency said yesterday in a summary of a policy-setting meeting of top leaders. The country will keep a prudent monetary policy with more attention on the balance between loosening and tightening, Xinhua reported.
Electricity output rose 0.6 percent in November from a year earlier, while crude steel output fell 0.2 percent.Industrial production’s 7.2 percent rise compares with October’s 7.7 percent expansion. The retail sales increase beat October’s 11.5 percent rise, which was also the median economist estimate.
Fixed asset investment matched the 15.8 percent median estimate in a Bloomberg News survey, slowing from the 15.9 percent growth in January through October. New property construction and home sales value fell in the first 11 months from a year earlier, underscoring a slowdown in housing.
“What is more worrisome is property sales,” said Wang Tao, Chief China economist at UBS Group AG in Hong Kong. “Property sector downturn remains the largest risk to growth in 2015, and we expect further policy easing and support to offset this downturn.”
To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net James Mayger
