Industrial production in China hits the brakes

Industrial production in China hits the brakes

BEIJING - Reuters
Industrial production in China hits the brakes

A CSR employee looks at a train at CSR rail transit equipment factory in the Chinese city of Guangzhou. The country’s industrial output shrinked in November. REUTERS photo

China’s industrial output growth hit its slowest pace in more than two years in November and inflation tumbled as economic conditions deteriorated, raising expectations Beijing will ease monetary policy again.

A batch of November data largely showed that growth in the world’s second-largest economy was slowing down further as it feels the chill of the eurozone crisis, although retail sales were stronger than expected.

“The risks (of a hard landing) are clearly there,” said Stephen Green, an economist with Standard Chartered Bank in Hong Kong. “We’ve already seen policy beginning to turn so obviously that’s encouraging.”

Inflation rate nears government target

China’s annual inflation rate tumbled in November to 4.2 percent, the lowest level since September 2010. It was the first time since February that inflation had fallen below 5 percent.

Inflation has dropped rapidly since a three-year high of 6.5 percent in July, allowing Beijing to shift its policy stance towards offering support for the economy, especially as it is now closer to the full-year government target for 2011 of 4 percent.

The data showed that industrial output growth slowed to 12.4 percent in November, below expectations for 12.8 percent and its weakest pace since August 2009. The weakness was flagged by the official purchasing managers’ index (PMI), which showed factory activity in November shrank from October.

Retail sales in November rose 17.3 percent from a year earlier, slightly outpacing October’s 17.2 percent.