Industrial output growth slides to new 6-year low
Industrial output growth at the world's factory, the mainland, hit a fresh six-year low last month at 11.4 per cent from a year ago, and economists said the worst had yet to come.
The growth, which was below economists' forecast of 13.4 per cent for September and the 12.8 per cent for August, underlined a quieter manufacturing sector last month as a financial crisis swept across the United States and Europe and a pre-Olympic Games ban on manufacturing activities near Beijing was lifted only in the latter part of the month.
Many economists expect a sharper decline for the whole of next year as economic contraction is likely to haunt the US, Europe and Japan, the mainland's top three trading partners.
'Industrial output will regain some growth in the remaining months of this year to about 15 per cent after the Olympics-related factor has gone,' Merrill Lynch economist Lu Ting said. 'But we will see a sharp slowdown next year because exports will be badly affected by a recessionary US and economic slowdown in Europe and Japan.'
The latest industrial output figure was part of a set of macroeconomic indicators the National Bureau of Statistics released yesterday.
UBS chief China economist Wang Tao expects escalating economic headwinds will curb this year's industrial output growth at 15 per cent, the weakest pace since 2002, from last year's 18.5 per cent, the strongest. Even as production hubs in the Pearl River Delta brace for closures of factories, owners were greeted with some good news as factory-gate price inflation softened to 9.1 per cent last month from a year ago and from 10.1 per cent in August.
Ms Wang attributed the milder inflation to lower raw material prices such as crude oil and steel and some price increases of end products.
'However, slowing consumer demand means factory owners' bargaining power to pass higher costs on to buyers is diminishing,' she said.
In a move to avoid unemployment, the central government would help small enterprises to stay afloat by rolling out further measures, National Bureau of Statistics director-general Li Xiaochao said yesterday.
He said labour-intensive industries such as textile, garments and toys would be offered higher rebates on value-added tax for exports.
In August, the central government loosened lending restrictions on banks by raising their lending quota while restoring value-added tax rebates for textile and garment exporters.
Trade group the Federation of Hong Kong Industries estimated at least 10,000 of the 65,000 Hong Kong-owned processing factories in the Pearl River Delta had gone under since the start of this year, a situation that will be exacerbated by the financial crisis. It estimated that 2.5 million workers in the delta would lose their jobs in the next three months.
