Chinas Growth weakens and inflation quickens

China’s industrial output rose the least in 11 months, retail sales growth eased and new loans climbed less than estimated, adding to signs that a slowdown in the world’s third-biggest economy is deepening.

Production rose 13.4 percent in July from a year earlier, the statistics bureau said in Beijing today. Inflation quickened to 3.3 percent, the fastest in 21 months, boosted by a low year-earlier base for comparison and rising food costs.

The government is cracking down on real-estate speculation, curbing credit and closing factories to meet energy-efficiency targets after three quarters of growth of more than 10 percent. China can sustain an expansion of more than 9 percent in the third and fourth quarters, with inflation likely to peak this month and then fall, Morgan Stanley said.

“The overall picture is quite benign and a soft landing is underway,” Wang Qing, a Hong Kong-based economist with Morgan Stanley, told Bloomberg Television. The government may ease investment controls and a 7.5 trillion yuan ($1.1 trillion) annual limit on lending in the fourth quarter, Wang said.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell