China’s industrial activity is still slowing

CHINESE industrial production growth slowed for the second consecutive month in July, fueling fears that its economy was losing steam.

Output rose by 13.4 per cent year-on-year in July. This was slightly below the 13.7 registered in June and significantly down on the 16.5 per cent reading in May.

The cooling off in the industrial sector was partly due to a base effect – growth was extremely strong this time a year ago –?and withdrawal of stimulus measures implemented after the financial crisis.

Authorities in Beijing who have been trying to slow the housing market, might take heart from the data. There was a sharp slowing in heavy industry output used for construction.
Mark Williams from consultancy Capital Economics, said that suppliers to the sector might be anticipating a slowdown as developers delay project starts. But fears that the Chinese government’s plans to shut inefficient production lines in an attempt to meet its year-end emissions targets could de-rail industrial production, might end up being a damp squib, said Williams. He noted that similar directives set by the government had been unsuccessful in the past.