Growth in China's industrial output slowed in the year through July for the fifth month in a row, but the central bank said it would keep a tight grip on credit to help steer the economy to a soft landing.
Production had increased by 15.5 percent in the period, compared with 16.2 percent in the year to June, the State Statistical Bureau said yesterday. That was close to forecasts of a 15.9 percent rise and well below peak growth of 23.2 percent in the 12 months to February.
Economists expect the moderating trend to persist, slowing industrial growth to around 15 percent as credit curbs and government orders to halt investment in overheated sectors continued to ripple through the world's seventh-largest economy.
"At the moment, all the signs point towards a nice, moderate slowdown, which will be good for the region," said Tai Hui, an economist with Standard Chartered Bank in Hong Kong.
Some economists and officials have called on the authorities to start relaxing the raft of restrictions, saying they were driving smaller private firms in particular out of business.
But the central bank said it was too soon to declare victory.
"The current macrocontrol measures are in a critical phase and have achieved initial results, but the foundation is still not solid," the People's Bank of China said.
Its task was to do a good job of implementing those monetary policies already in place and ensuring reasonable control of credit growth, the bank said in its quarterly monetary report.
Tightening measures such as requiring banks to hold more cash in reserve instead of lending it out have succeeded in bringing the pace of money supply growth below the central bank's target.
The bank said it expected the economy, which grew by a slower-than-expected 9.6 percent in the year through the second quarter, would ease further in the third quarter. It forecast inflation, now at a seven-year high, would moderate by the end of the year.
Skeptics periodically express doubts about the quality of China's data. But slowing money-growth figures from the central bank, deemed to be the most accurate data set, tell the same story of a cooling economy as the GDP and output figures.
"GDP and industrial production do seem to follow relatively closely in terms of the trend, so in that regard we do think it is a relatively reliable data series," Grace Ng (吳向紅) of JP Morgan in Hong Kong said of the report.
Smoothing out seasonal variations, JP Morgan estimates that output rose 0.8 percent last month compared with June. The bank calculates production rose 1.0 percent in June and fell 0.4 percent in May, when the government cracked down hard on credit.
Despite the overall slowdown, mixed data from sectors where frenzied investment has worried policymakers help explain the bank's cautious stance.
Growth in output of aluminum slowed to 10.8 percent in the 12 months to July from 36.8 percent a month earlier.
Cement production growth declined to 11 percent from 13.2 percent, and automobiles to 5.4 percent from 20.4 percent.
But growth in output of steel quickened to 18.5 percent from 17.3 percent, though it remained well below a peak of 37.7 percent in the year to February.
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