| Industrial output grows slowest in 2 years |
BEIJING, Nov. 15 -- China's industrial output rose at the slowest pace in almost two years in October, reflecting government investment restrictions and indicating an export boom may be losing steam, Bloomberg reported today.
Production rose 14.7 percent from a year earlier to 760 billion yuan (US$96 billion) after gaining 16.1 percent in September, the National Bureau of Statistics said today.
Output expansion has eased since June amid a campaign by Premier Wen Jiabao to choke off funding for wasteful investment projects. Growth may continue to moderate as a slowdown in US demand makes managers at export factories more cautious about ramping up production.
"Exports have begun to show signs of weakening,'' said Jim Walker, chief economist at CLSA Asia-Pacific Markets in Hong Kong. At the same time, government "tightening this year clearly has had an impact on parts of the economy."
October's increase was the smallest since December 2004, adjusting for distortions caused by the Lunar New Year. For the first 10 months combined, output rose 16.9 percent from a year earlier.
Inventories at US wholesalers rose to a more than one-year high in September, a November 9 report showed, suggesting companies in the world's largest economy may place fewer orders with overseas producers. The US is China's largest export market.
Textile output rose 12 percent after gaining 14.8 percent in the first nine months, today's report said. Output of electrical machinery climbed 12.6 percent after a 16.1 percent jump. Output of telecommunications products also slowed. The bureau didn't give a comparable breakdown for September.
A slowdown in exports could partly be a result of the government's own efforts to narrow the trade surplus, which ballooned to a record US$23.8 billion in October, said Paul Tang, an economist at Bank of East Asia Ltd.
The Ministry of Finance is raising export taxes on oil, steel and nonferrous metals this month and cutting import levies for alumina. In September, the government announced it will reduce incentives for overseas sales of steel and textiles.
"The government is targeting a slowdown in exports and manufacturing investment because in the past it wasn't sustainable," said Tang, who's based in Hong Kong. "It wants to shift the economic model towards domestic consumption."
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