China forecasts pickup in industrial production

Industrial output will likely grow quicker this quarter, laying solid ground for Beijing to realise its target of 7.5 per cent economic growth this year.

The forecast yesterday by Ministry of Industry and Information Technology spokesman Zhu Hongren was in line with economists' expectations for economic growth to rebound in the fourth quarter, after slowing for seven consecutive quarters. But he said China still faced problems, including rising business costs and weak external demand.

"Industrial operations have come to a crucial point of bottoming out and stabilising, while positive factors are accumulating," Zhu said. Fourth-quarter output growth might accelerate from the third quarter, he said.

Greater confidence by investors in the mainland's economic prospects helped push the yuan to 6.2419 to the US dollar in Shanghai yesterday, the highest rate since late 1993.

Mizuho Securities said the yuan's strength was partly helped by the US Federal Reserve's third round of quantitative easing last month, which sent capital flowing into emerging markets, including China.

Value-added industrial production grew 9.1 per cent in the third quarter from a year earlier, slower than the 9.5 per cent growth in the second quarter and the 11.6 per cent gain in the first. But, output growth sped up month to month from July to September, official data showed.

The preliminary HSBC manufacturing purchasing managers index for the mainland also signalled that a recovery could be in sight. The gauge climbed to 49.1 in October from 47.9 in September, reflecting a slower rate of contraction.