China Industrial-Output Growth Is Weakest Since 1999

China¡¯s industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive the slumping economy.

Output rose 5.4 percent in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Production grew 8.2 percent in October.

The central bank may add to the steepest interest-rate cut in 11 years to revive consumer and business confidence after the CSI 300 Index of stocks fell 63 percent this year and exports declined last month.

Output grew the least since Bloomberg data began in 1999. The yuan traded at 6.8475 against the dollar as of 3:10 p.m. in Shanghai, from 6.8458 before the announcement. The CSI 300 closed 0.8 percent higher on the plan to boost money supply.

The central bank has reduced the one-year lending rate to 5.58 percent from 7.47 percent in September and dropped quotas limiting lending by banks. Wang expects up to 54 basis points of reductions before year¡¯s end.

Growth Rate May Halve

China¡¯s economic growth may slump to 5 percent in the first half of next year, less than half of the 11.9 percent expansion in all of 2007, Ben Simpfendorfer, an economist with Royal Bank of Scotland Plc in Hong Kong, said today.

The government has set an 8 percent growth target for next year to generate jobs and avoid social instability in the world¡¯s most populous nation, China Banking Regulatory Commission Chairman Liu Mingkang said in Beijing on Dec. 13.

The State Council last month announced a 4 trillion yuan ($584 billion) infrastructure spending package to sustain growth through 2010.

China¡¯s economic slowdown contributed to Australia, the world¡¯s largest shipper of coal and iron ore, cutting today a forecast for its commodity exports for the year to June 30, 2009, by 10 percent.

¡°Commodity-producing countries will be very worried,¡± said Huang Yiping, chief Asia Pacific economist at Citigroup Inc. in Hong Kong.

Electricity Output Falls

Industrial production is plunging around the world as demand dries up. China¡¯s electricity output fell by 9.6 percent in November from a year earlier, today¡¯s figures showed. Pig- iron production fell 16.2 percent. Raw steel declined 12.4 percent. Steel products tumbled 11 percent.

Maanshan Iron & Steel Co. has cut output because of tumbling demand from builders and automakers.

President Hu Jintao visited Angang Steel Co. during a three-day visit to Liaoning province, a center for heavy industry, the state-run Xinhua News Agency reported yesterday. He pledged efforts to maintain stable growth in the face of ¡°serious challenges and difficulties.¡±

Vehicle production fell 15.9 percent and car output declined 10.1 percent.

¡°The number is quite awful,¡± said Kevin Lai, an economist with the Daiwa Institute of Research in Hong Kong. ¡°Enterprises continue to run down inventories and inevitably will reduce production quite massively.¡±

Money-Supply Target

China aims to boost money supply by 17 percent in 2009, the State Council said Dec. 13. That compares with the 14.8 percent increase in M2, the broadest measure which includes cash and all deposits, last month from a year earlier.

M1, which includes cash and demand deposits, increased by the least in almost 13 years, while term deposits climbed because of a lack of confidence in the economy, said Li Wei, an economist at Standard Chartered Bank Plc in Shanghai.

New yuan lending surged to 476.9 billion yuan in November from 181.9 billion yuan in October, after the central bank reduced interest rates and reserve requirements for lenders.

Banks may have ¡°rushed to lend to the most attractive projects that are relatively ease to identify in the early stage of implementation of the fiscal stimulus package,¡± said Wang Qing, chief China economist at Morgan Stanley in Hong Kong.

Spending, Tax Cuts

The government warned Dec. 10 of ¡°increasing downward pressure on the economy¡± and pledged to boost spending, cut taxes and do more to create jobs to maintain social stability. At stake is the 60 percent share of global growth Merrill Lynch & Co. forecasts China will contribute next year if its economy expands 8.6 percent.

Merrill Lynch cut today its forecast for growth next year to 8 percent from 8.6 percent.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.