China’s industrial output slows on pollution crackdown

Posted on 15 November 2017

Source: Taipei Times

 China’s industrial output slowed last month, official data showed yesterday, as authorities fight smog by clamping down on pollution produced by heavy industries.

Output at factories and workshops expanded 6.2 percent year-on-year, the Chinese National Bureau of Statistics (NBS) said, slowing from 6.6 percent in September and below a forecast of 6.3 percent in a Bloomberg News survey.

The government has moved to wind down production at some steel factories and smelters in a drive to clean up the nation’s smog-ridden cities.

Factories also closed during last month’s Chinese Communist Party National Congress, during which Chinese President Xi Jinping (習近平) called for more efforts to protect the environment.

The government is also pushing to make domestic demand a growth driver of the world’s second-largest economy, and make China less reliant on manufacturing and exports.

“Generally speaking, the national economy maintained stable performance with improved quality and sound momentum,” the NBS said. “However, we must be aware that China is at a pivotal stage for transforming the growth model, [and] problems of unbalanced and insufficient economic development were acute.”

The readings follow a surge in factory price figures last week.

The clean-air policy, which has been stepped up going into the winter when pollution worsens, has led to tighter supplies, in turn lifting prices.

NBS data showed growth in retail sales slowed to 10 percent last month, down 0.3 percentage points from September and also short forecasts of 10.5 percent.

Fixed asset investment grew 7.3 percent year-on-year from January to last month in line with expectations.

“A cooling property sector and slightly softer foreign demand weighed on the economy last month,” Capital Economics analyst Julian Evans-Pritchard wrote in a research note. “Disruptions from the anti-pollution crackdown in the northeast of the country probably contributed too.”

However, “these drags continue to be partly offset by still strong infrastructure spending,” he said.

This month’s figures follow a string of positive indicators suggesting the economy is stabilizing, with GDP tipped to grow at a faster pace than the government’s target this year.

Trade data last week showed import and export numbers had softened slightly last month.

“China still intends to strike a balance between growth, debt and leveraging,” Singapore-based Commerzbank AG economist Zhou Hao (周浩) told Bloomberg News.

However, “that said, we need to prepare for some downside bias for the trade and activity data in the coming months,” Zhou said.

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