China’s GDP growth seen decelerating to 6.4% in 2018

Profits of China's industrial firms remained buoyant in October despite government curbs on risky financial transactions aimed at stabilising the world's second-biggest economy that has started to cool slightly in recent months.

Economists expect China's gross domestic product expanding at a slower pace of 6.4 per cent in 2018 against 6.8 per cent estimated in 2017 as country's policymakers look for shift to more sustainable economic growth rates avoiding financial risks amidst a push for a cleaner development model.

China's industries have gained from the government-led construction spree, which helped lift demand and prices for building materials despite higher costs of borrowing.

More than half of the increase in profits in October came from mining, iron and steel smelting and processing, chemicals, and oil and natural gas extraction, He Ping of the statistics bureau said in a statement.

The closure of polluting plants and factories have fuelled fears of supply shortages in the winter, lifting prices of finished goods, including steel and copper products.

The high-price trend has persisted, with domestic iron ore futures prices up over 15 per cent since the start of November, while coking coal has risen over 23 per cent.

Data earlier in the month showed China's factory prices continued to post strong gains as capacity cuts and anti-pollution measures kept supply in check

However, this has not helped improve sentiment as business confidence in China waned reflecting the mood of overseas investors. There was a slight improvement in business sentiment among small businesses.

Matching overseas investors' mood, confidence among China's sales managers and steel producers waned in November, according to a survey by the China Economic Panel - a joint project of the Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai.

The survey showed that expectations for the next 12 months dropped to 7.6 this month from 17.3 in October, which is still above the long-term average of 5.4.

Despite government's infrastructure push, the construction sector performance was worse than in the previous month, according to the survey. In the long term, the construction sector's slight upward trend will probably remain in place, the panel said.

Sentiment among sales managers eased, according to a survey by London-based World Economics Ltd., as the reading fell to 51.5, the lowest in 13 months. Values above 50 indicate growth. ''The Chinese economy continued to grow in November but at a slower rate,'' Chief Executive Ed Jones wrote in a statement. ''Panelists have explained that their companies have been lowering capital expenditure, inventories of stock, and limiting their exposure to under-performing accounts to increase their capacity against possible coming risks and future challenges.''

The S&P Global Platts China Steel Sentiment Index edged down to 31.93 this month from 33.61 in October. The gauge is based on a survey between 75 and 90 China-based market participants, including traders and steel mills. ''China's steel market is still coming to terms with the likely impact of winter production cuts on demand and prices,'' Paul Bartholomew, a senior managing editor at S&P in Melbourne, wrote in a report. ''As well as lower output, construction activity will also slow for environmental reasons, so both supply and demand will be affected.'' Chinese mills and plants are in a sweet spot this year. Industrial profits increased 25.1 percent in October from a year earlier, compared with a 27.7 percent pace a month earlier that was the highest in almost six years, the National Bureau of Statistics said Monday.

Standard Chartered Plc's Small and Medium Enterprise Confidence Index picked up to 56.1 this month from 55.2 in October, the bank's survey of more than 500 companies shows. ''Current performance of sales and production stays resilient, while the outlook for both eases,'' Standard Chartered economists Shen Lan and Ding Shuang wrote in the report. The central bank's targeted reserve-requirement ratio cut, which is to be implemented in 2018, will prompt banks to increase credit allocation to the smaller firms, the economists wrote.

Manufacturing was little changed from last month, according to the China Satellite Manufacturing Index, which remained unchanged at 51.08. The gauge published by San Francisco-based SpaceKnow Inc. tracks commercial satellite imagery to gauge activity levels across thousands of industrial sites.