China factory output slows as government cracks down on pollution

BEIJING: China's industrial output slowed in October, official data showed on Tuesday, as authorities fight smog by clamping down on pollution produced by heavy industries.

Output at factories and workshops expanded 6.2 per cent on-year, the National Bureau of Statistics (NBS) said, slowing from 6.6 per cent in September and below a forecast of 6.3 per cent in a Bloomberg News survey.

The government has moved to wind down production at some steel factories and smelters in a drive to clean up the country's smog-ridden cities. Factories also closed during last month's Communist Party congress, during which President Xi Jinping called for more efforts to protect the environment.

The government is also pushing to make domestic demand a growth driver of the world's second largest economy and make China less reliant on manufacturing and exports.

"Generally speaking, the national economy maintained stable performance with improved quality and sound momentum," NBS spokeswoman Liu Aihua told reporters. "However, we must be aware that China is at a pivotal stage for transforming the growth model," she said, adding that "problems of unbalanced and insufficient economic development was acute".

The readings follow a surge in factory price figures last week.

The clean-air policy, which has been stepped up going into the winter when pollution worsens, has led to tighter supplies and in in turn lifting prices. NBS data showed growth in retail sales slowed to 10 per cent in October, down 0.3 percentage points from September and also short forecasts of 10.5 per cent. Fixed asset investment grew 7.3 per cent on-year from January to October, in line with expectations.

"A cooling property sector and slightly softer foreign demand weighed on the economy last month," Capital Economics analyst Julian Evans-Pritchard wrote in a research note.

"Disruptions from the anti-pollution crackdown in the north-east of the country probably contributed too," he said. However, "these drags continue to be partly offset by still strong infrastructure spending".

This month's figures follow a string of positive indicators suggesting the economy is stabilising, with gross domestic product tipped to grow at a faster pace than the government's target this year.

Trade data last week showed import and export numbers had softened slightly in October.

"China still intends to strike a balance between growth, debt and leveraging," Zhou Hao, an economist at Commerzbank AG in Singapore told Bloomberg News. But, "that said, we need to prepare for some downside bias for the trade and activity data in the coming months".