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August 12, 2009

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Home » Business » Economy

Slower rise than expected

CHINA'S industrial output and fixed-asset investment grew at a slower-than-expected pace last month, reflecting the government's assessment that the foundation for an economic rebound is still not solid.

Industrial output jumped 10.8 percent last month from a year earlier, the third straight monthly increase in growth, following a 10.7 percent gain in June, the National Bureau of Statistics said yesterday.

The growth fell short of a market consensus of 11.5 percent. China International Capital Co had estimated that last month's output would grow 11.5 percent to 12.5 percent.

Fastest pace

"Although the growth was slower than our expectations, it was still the fastest since October 2008, and the industrial output will keep a strong upward momentum," said Dong Xian'an, an analyst with Industrial Securities Co.

In the first seven months, industrial output gained 7.5 percent, compared with 16.1 percent growth in the same period a year earlier, the statistics bureau said.

The output of automobiles accelerated the most last month by 51.6 percent to 1.14 million units, followed by a 21.6 percent growth for cement and 14.8 percent rise for coal.

The urban fixed-asset investment for the first seven months climbed 32.9 percent to 9.59 trillion yuan, the bureau said.

That was less than the 33.6 percent growth in the first half.

"The 32.9 percent growth was slower than our expectations partly because of delayed government stimulus spending and slower bank loans," said Zhu Baoliang, an economist at the State Information Center.

Investment in agricultural surged 62.5 percent, manufacturing grew 27.8 percent, and services rose 36.5 percent in the first seven months.

"The recent announcements by banks that they will slow lending in the second half of the year have sent stocks plummeting, and caused policy makers to emphasize their commitment to an 'appropriately loose' monetary policy," said Alaistair Chan, an analyst at Moody's

"But given that the economy seems to be picking up, policy makers are starting to think of exit strategies, and this is likely to result in lower investment growth in coming months," he said.


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