China's industrial output growth in April slowed to 11.9 per cent, down from 13.5 per cent in March, prompting some economists to express concerns about the risk of a recession unless Beijing turns on the monetary tap. 'Deflationary pressure is definitely there as many of the major indicators are down: industrial output, retail sales, imports, and inflation, ' DBS Securities senior economist Chu Siu-wah said. He expected industrial output to remain sluggish in the next few months. The State Statistical Bureau said yesterday year-on-year industrial output growth was 11.4 per cent, slightly up from 11 per cent in the first quarter but way down from 13.7 per cent in 1996. Natwest Securities senior economist Charles Li said the sluggish industrial production figures reflected falling demand and rising inventories. 'There is definitely a concern about the recession,' he said. Both Mr Chu and Mr Li expected the Chinese Government to be under further pressure to relax monetary supply to boost the economy in the latter half of the year. So far, Beijing has showed no obvious signs of monetary relaxation, despite widespread expectations both at home and abroad. By the end of March this year, the broad money supply, M2, rose by 21.6 per cent, the third consecutive quarterly fall since the third quarter of 1996 and down from 25.3 per cent by the end of last year. That came at the same time as the country's benchmark retail price index rose only 1.7 per cent in March - the lowest since 1991. The lower prices also reflected weak demand, Mr Li said. Retail sales in the first quarter rose 12.6 per cent after being adjusted for inflation, down from 13.3 per cent in 1996 and 13.5 per cent in real terms. Imports, another indicator of demand, also fell in the first quarter, down 1.8 per cent year-on-year. One more indicator, investment in fixed assets by the state firms, rose 13.9 per cent in the first quarter of 1997, down from 16.3 per cent in first quarter of 1996. Mr Chu of DBS Securities said one major problem which had so far prevented Beijing from turning on the money supply was its worry that such a move would further fuel the already volatile stock markets in China. The markets in Shanghai and Shenzhen have rocketed over 40 per cent so far this year. A breakdown of the April figures showed output from state-owned industrial enterprises grew 5.8 per cent year-on-year to 83.5 billion yuan (about HK$77.48 billion) in April. Output from collective industry grew 14.3 per cent to 53.6 billion yuan, while that from township enterprises reached 36.1 billion yuan, up 14.6 per cent compared with April, 1996. Output from other types of industry increased 14.6 per cent year-on-year to 37.2 billion yuan, the figures showed.