China’s industrial production grew by 7.7% compared to expectations of 8%, while retail sales, which had been forecast to expand by 11.6%, came in at just 11.5%. Fixed asset investment in October dropped to 15.9% compared to 16.1% in September.
Fixed asset investment is now at a 13-year low. November’s factory output figures are likely to be weaker still, as many factories in the north of the country shut early to reduce air pollution.
With virtually all economic data coming out of China pointing to an accelerating cooling, pressure will be mounting for more stimulus from the government.
In the third quarter of 2014, GDP growth in China was at a five-year low.
Calls for more easing by the Chinese government are nothing new. So far, Beijing has not stepped up with significant support measures. A growing number of economists believe it is now too late to introduce effective measures.
The Chinese government has a target of 7.5% GDP growth for 2014. With weak factory production over the past few months plus a sluggish housing market, meeting this target is not very unlikely.
China’s President Xi Jinping said earlier this year that it would be “acceptable” if GDP growth for 2014 came in lower than the 7.5% target.
According to a consensus of economists from North America and Western Europe, China is set to grow at its slowest pace in 2014 since 1990.
With unemployment at 4.07% in September, compared to 4.08% in June, the labor market appears to be holding up.
President Xi Jinping’s anti-corruption drive has hit sales in luxury goods and undermined local governments’ enthusiasm for new investment projects.
