Growth in China’s factory output fell to its lowest level in nearly seven years as trade plunged, data showed yesterday, adding to the threat of heavy job losses that could fuel unrest.
Industrial output rose 5.4 percent last month from a year earlier, down from October’s 8.2 percent growth, the National Bureau of Statistics said. An employee of the bureau who refused to give his name said it was the smallest monthly expansion since February 2002, when factory output grew by 2.7 percent.
The industrial weakness could have a global impact as Chinese factories stop buying foreign raw materials. Manufacturing makes up 40 percent of China’s economy and employs tens of millions of people, and the potential loss of paychecks could undermine government efforts to shield the country from the global downturn by encouraging Chinese consumers to spend more.
Factory output may have started to shrink in December, Moody’s Economy.com economist Sherman Chan (陳穎嘉) said.
“More and more job cuts in the manufacturing sector — which will curb consumer demand — will have wide ramifications in the domestic economy,” Chan said in report. “Beijing will need to do all they can to revive sentiment and prevent social unrest.”
The Chinese leadership has warned of rising instability due to job losses and are pressing employers to minimize layoffs as Beijing rolls out measures to insulate China from the global economic slowdown.
A slowdown in industrial growth was expected after China’s exports fell last month for the first time in seven years.
Factory layoffs are rising in coastal regions that depend on exports, and the malaise is spreading inland as domestic demand for steel, autos and other goods weakens. Labor protests have occurred in Guangdong Province.