(MENAFN- Arab Times) BEIJING Dec 12 (Agencies): China's economy showed further signs of fatigue in November with factory output growth slowing more than expected and growth in investment near a 13-year low putting pressure on policymakers to unveil fresh stimulus measures. In a sign that banks were already responding to Beijing's instructions to reflate the economy however new lending jumped 56 percent in the month.
Weighed down by a sagging housing market China's economic growth had already weakened to 7.3 percent in the third quarter so November's soft factory and investment figures suggest full-year growth will miss Beijing's 7.5 percent target and mark the weakest expansion in 24 years. 'The data bodes ill for GDP growth in the fourth quarter which is bound to slow further' said Dariusz Kowalczyk senior economist at Credit Agricole CIB in Hong Kong. Property Growth in real estate investment also slipped for the first 11 months of 2014 though property sales registered their best month this year buoyed by Beijing's efforts to revive a sector on which so much of the economy depends. After September's move to cut mortgage rates and downpayments for some home buyers the People's Bank of China cut interest rates on Nov 21 for the first time in two years. The surprise rate cut signalled policymakers' growing concern that a sharper slowdown in the economy would raise the risk of job losses and loan defaults. Factory output rose 7.2 percent in November from a year earlier down from October's 7.7 percent the National Bureau of Statistics said on Friday and missing analysts' forecasts of 7.5 percent. Fixed-asset investment an important driver of growth grew 15.8 percent in the first 11 months from the same period last year slipping from 15.9 percent in the first 10 months. Other data this week showed China's export growth slowed sharply in November while imports unexpectedly shrank. And despite the resulting expansion in the money supply consumer inflation hit a five-year low stoking expectations that Beijing may move more aggressively to stave off deflation including a cut to banks' reserve requirement ratio (RRR) which would allow them to lend still more. 'We're ready for an RRR cut at any point. We think there will be 100 basis points of cuts over the next couple of quarters' said Tim Condon head of Asia research at ING in Singapore. The closure of many factories in northern China early in November to reduce air pollution as Asia-Pacific leaders met in Beijing likely curbed industrial output but demand for products such as concrete and steel was also hit by slackening growth in export orders and the cooling housing market. A bright spot in November was retail sales where growth ticked up to 11.7 percent from 11.5 percent in October which was the slowest pace since early 2006. Analysts expect further interventions by Beijing in 2015 after top leaders at the annual Central Economic Work Conference on Thursday pledged to make fiscal policy 'more forceful' while keeping monetary policy 'not too tight or too loose'. Economists who advise the government have recommended that China lower its economic growth target to around 7 percent in 2015. 'The overall profile of activity indicators remained weak in November' ANZ analysts Liu Ligang and Zhou Hao said in a research note adding they posed 'challenges' to the official 7.5 percent target for gross domestic product (GDP) growth this year. Policy Policy makers at the Central Economic Work Conference which closed Thursday are believed to have set growth and inflation targets for next year although the official announcement of the goals is reserved for the national parliament opening in March. 'We must take the initiative to adapt to the new normal in economic development keep the economy operating in a reasonable range and (elevate) structural reform to an even more important position' according to a meeting statement released by the official Xinhua news agency. President Xi Jinping and other top leaders have said they want to put China's increasingly affluent consumers at the centre of the economy rather than investment and exports. They say they are ready to tolerate slower expansion to achieve more sustainable growth. Analysts expect Beijing to lower the 2015 target to 7.0 percent which would be the lowest since 2004. China last cut the target in 2012 to 7.5 percent from 8.0 percent. Julian Evans-Pritchard an economist with research firm Capital Economics said in a report that authorities 'appear to be taking a relatively sanguine view about this recent weakness' noting that they were placing emphasis on growth quality over speed. 'We continue to believe that policy makers will mostly allow the structural slowdown in investment in sectors with oversupply such a real estate to run its course particularly given that both employment and consumption growth appear healthy' he said. China's economy grew 7.3 percent in the third quarter worse than the 7.5 percent in the previous three months and the slowest since 2009 at the height of the global financial crisis.
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