China July factory output grows 6 per cent, well below forecast

The People’s Bank of China surprised markets on Tuesday by devaluing the yuan by nearly 2 percent, and vowing to refer to more market based valuations in setting the daily trading band for the closely-managed currency.

On Wednesday, official data showed that there was a slow growth in the July industrial production figures of China.

China’s electricity output fell two percent year on year to 509 billion kilowatt-hours in July, according to the National Bureau of Statistics (NBS) on Wednesday.

A year-long slump in the housing market has dragged on the economy, which is widely expected to post its worst performance in a quarter of a century this year.

While home sales and prices have improved in bigger Chinese cities in recent months after a barrage of government support measures, conditions remain weak in smaller cities and a huge overhang of unsold houses is discouraging new investment and construction.

Reflective of the weakness in property investment, crude steel output contracted at a faster pace, declining 4.6% from 12-months earlier.

The declining output and investment growth showed the rebound in June was just temporary and pressure for growth was again on the rise, Qu said.

Fixed-asset investment (FAI), a key economic driver, expanded 11.2 percent in the first seven months of the year from the year-earlier period, missing estimates for a 11.5percent gain and compared with a 11.4percent gain seen between January and June.

A cooling property market has weighed heavily on the economy over the past year.

NBS statistician Jiang Yuan attributed the drop mainly to flagging external demand, a weak property sector and lowered production of some consumer goods, including automobiles and cigarettes.

Authorities have already reduced benchmark interest rates four times since November and have also lowered the RRR three times in a bid to stimulate the stalling economy.