China’s Industrial Output Growth Slows; Retail Sales Rise At Faster Pace

Authorities are trying to transform the country’s growth model to a slower but more sustainable one driven by consumption rather than infrastructure investment, but the transition to the “new normal” is proving bumpy.

Retail sales were up 11 percent on-year, against a forecast of 10.9 percent, according to a Reuters poll. Fixed asset investment rose 10.2 per cent in the first 10 months, slightly slowing from a 10.3 per cent gain in the January-September period.

China’s President Xi Jinping said on Tuesday that China needed to reduce property inventories to ensure sustainable development of its property market.

The weak investment growth, reported by the National Bureau of Statistics (NBS), compared with an increase of 2.6 per cent in January-September and marked the slowest rate since early 2009.

After the bleak third-quarter economic data, China cut interest rates for the sixth time since November a year ago and trimmed the reserve requirement ratio – the amount of cash banks must keep in reserve – to boost lending.

While retail sales registered stable growth, there are still significant deflationary pressures, said HSBC analyst Qu Hongbin. Industrial output in northeastern areas extended losses by 4.6 percent from 1.8 percent in September. October trade figures widely missed forecasts, with exports falling 6.9 per cent and imports tumbling 18.8 per cent. The effects of China’s slowdown have also spilled over to the country’s once-resilient retail industry.