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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