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China Output Growth Slows to 5-Years Low
Sep 17, 2014

China's industrial production growth slowed sharply in August to its lowest level for more than five years at 6.9 percent, intensifying concerns for the world's second-largest economy.

  • The key indicator, which measures output at factories, workshops and mines, slumped from a 9.0 percent year-on-year expansion in July and was the worst since 5.7 percent in December 2008, during the global financial crisis. It also fell far short of the 8.7 percent median increase.

  • The abrupt slowdown are certain to compound growing worries 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 percent in the same month on-year, also down from 12.2 percent in July.

  • Fixed asset investment, a measure of government spending on infrastructure, expanded 16.5 percent on-year in the first eight months of 2014. It was below the 17.0 percent reading for the first seven months of the year, and also below the 16.9 percent forecast.

  • China is targeting expansion of about 7.5 percent 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.

  • 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.

  • Inflation eased to a four-month low of 2.0 percent in August.

  • China's GDP grew at a higher-than-expected 7.5 percent in the second quarter from 7.4 percent in the first three months of the year, which was the worst since a similar 7.4 percent result in July-September 2012.


Recent concerns have centred on fallout for the economy from a potentially 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 ($114.5 billion) in new loans last month, 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.


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