China’s industrial output growth in August lowest since financial crisis

China's industrial output increased at its weakest pace following the global financial crisis and fixed-asset investment growth undershot expectations, adding to evidence the world's second-biggest economy was losing momentum, Bloomberg reported.

The National Bureau of Statistics said today that factory production was up 6.9 per cent from a year earlier in August as against 9 per cent in July and the 8.8 per cent median estimate in a Bloomberg News survey.

Retail sales were up 11.9 per cent and fixed-asset investment in the January-August period rose 16.5 per cent.

The data showed that the impact of China's property slump on the economy was deepening, with declining home sales picking up momentum last month and electricity output declining for the first time since 2009. The slowdown would test the reluctance of premier Li Keqiang to spur growth with monetary stimulus, as risks increase to his 2014 expansion goal.

Liu Li-Gang, chief Greater China economist at Australia & New Zealand Banking Group Ltd in Hong Kong, said Li should be worried if he was serious about meeting his 7.5-per cent target. He said Li might want to use further policy levers to achieve his target, such as lowering reserve requirements for the country's largest banks.

The dismal output data raised fears the world's second-largest economy might be at risk of a sharp slowdown unless Beijing introduced fresh stimulus measures, Reuters reported.

The output data, coupled with weaker readings in retail sales, investment and imports, indicated sliding momentum as the cooling housing market increasingly dragged down sectors from cement to steel and sapped consumer confidence.

Industrial output was up 6.9 per cent in August from a year earlier - the lowest since 2008 when the global financial crisis hit the economy as against expectations for 8.8 per cent and slowing sharply from 9.0 per cent in July.

According to Xu Gao, chief economist at Everbright Securities in Beijing, the August data might point to a hard landing. He added the extent of the growth slowdown in the third quarter would not be small.

He said the chances of cutting interest rates and bank reserve requirements had increased, adding, the government would likely cut interest rates.