Sat, Nov 10, 2012 - Page 15 News List

China’s factory output rises in sign of recovery

AP, BEIJING

China’s factory output and consumer spending improved last month in a new sign of possible economic recovery as the Chinese Communist Party prepared to install a new generation of leaders.

Growth in factory output accelerated to 9.6 percent over a year earlier from the previous month’s 9.2 percent, the government reported yesterday.

Retail sales rose 14.5 percent, up from September’s 14.2 percent.

Investment growth strengthened, rising 25.2 percent over a year earlier, up from the previous month’s 25.1 percent.

Also last month, inflation eased further, giving Beijing more room to cut interest rates or launch new stimulus measures to speed a recovery with less danger of igniting politically dangerous price rises.

The improvement came as the nation’s leaders were holding a party congress in the capital that was expected to install Chinese Vice President Xi Jinping (習近平) as party leader and China’s next president.

The new leadership faces challenges, including slowing growth that the World Bank and Chinese analysts say will require a drastic change in the country’s economic strategy.

They say Beijing must reduce the dominance of state companies in industries from finance to energy to banking and nurture free-market competition to keep incomes rising.

Economic growth fell to a three-and-a-half-year low of 7.4 percent in the quarter ending in September, but investment, retail sales and other indicators improved from the previous quarter.

Forecasters expect growth to rebound this quarter or early next year.

They say any recovery is likely to be gradual and too weak to drive global growth without improvements in the US and Europe.

Beijing launched a mini-stimulus early this year, cutting interest rates twice in June and July, and stepping up investment by state companies and spending on building airports and other public works.

However, authorities avoided bigger measures after their huge spending in response to the 2008 global crisis fueled inflation and a wasteful building boom.

Last month, consumer prices rose 1.7 percent, down from the previous month’s 1.9 percent. That was driven by a 1.8 percent gain in food prices, which are unusually sensitive in a society where the poorest families spend up to half their incomes on food, down from September’s 2.5 percent.

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