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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (15393)	11/10/2004 12:44:05 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

China posts an easing in its output growth Reuters Thursday, November 11, 2004 BEIJING China's annual industrial output growth slowed to 15.7 percent annually in October from 16.1 percent in September, the government announced on Wednesday. . Economists said that the trend, if sustained, would help reduce pressure for another increase in interest rates this year. . Production rose to 489 billion yuan, or $59 billion, led by steel and household appliances, the National Bureau of Statistics said. . The figures suggest that the loan restrictions ordered by Prime Minister Wen Jiabao are slowing expansion in some of the industries that the government wanted to cool. . Last month, China raised benchmark interest rates for the first time in nine years, and some economists expect further increases. . Output "is still too strong for the government's comfort, and we expect it to slow further going forward," Joseph Lau, an economist at Credit Suisse First Boston in Hong Kong, said. The government would like to see production growth "slow down to at least 12 percent," he added. . Industrial output growth has gradually slowed since peaking at 23.2 percent in the 12 months to February, following the lending and investment restrictions, but it picked up pace again in August and September. . There was a marked decline in sedan car production, which fell 14 percent from a year earlier, the report said. . "It will help allay some of the concern that the economy was reaccelerating when the government is trying to get it to slow down," Michael Spencer, a Deutsche Bank economist in Hong Kong, said. "But it's not likely to give anybody any worries that there's a hard landing in the works." . China's central bank raised interest rates by 0.27 percentage point, to 5.58 percent for one-year yuan loans and to 2.25 percent for one-year deposits. . While many analysts expect Beijing to raise rates again over the next 12 months, they say authorities will become more cautious if other data due out in the next two weeks mirror the slowdown in industrial output. . "The possibility of raising interest rates again within this year is not very big, as inflation is expected to slow gradually in coming months," said Song Guoqing, an economist at the Stock Exchange Executive Council in Beijing. . Last year, Beijing started measures to ease overheated investment and lending, fearing that rapid expansion in industries like steel, cement and property could bring about a sharp decline in demand. . The measures affected industrial growth, which slowed for five straight months before accelerating again in August and September. . China's growth rate slowed to 9.1 percent in the third quarter from 9.6 percent in the second quarter, and the State Information Center, a research unit of the nation's top planning body, predicts growth will slow further to 8.7 percent in the final three months of the year. The deputy governor of the central bank, Li Ruogu, said last month that a growth rate of 7 percent to 8 percent would allow for a healthy economy for the next two decades. . "If we're talking about slowing economic growth, say, slowing from 9 percent to 7 percent," Randy Baseler, vice president of marketing at Boeing, said, "growth rates are still so high that it won't have much effect." . Raw steel output surged 25 percent from a year earlier last month, and production of dishwashers jumped 395 percent, according to the report. iht.com