China’s industrial production up, retails under expectations

Chinese industrial production grew less than expect last month, falling behind market forecasts and raising questions about the strength of recovery in the world's second largest economy, official figures revealed on Monday. 

According to the Chinese National Bureau of Statistics, industrial production rose 6.1% from a year earlier in October, compared with 6.1% in September. Retail sales growth slowed to 10%, missing estimates for 10.7%. Retail sales were surprisingly weak, growing at 10% over the year, but well down on the 10.7% growth recorded in September. Further, China's fixed-asset investment rose 8.3%, compared to the same month one year ago, whereas economists expected an increase 8.2%, unchanged from the prior month. As in the preceding quarters, the Chinese economy expanded 6.7% in the Q3. 

The construction boom in turn has helped perk up the ailing industrial sector, spurring demand for materials from cement to steel. But top policymakers and investors are also clearly growing more concerned about the risks of prolonged debt-fuelled stimulus. China's overall debt has jumped to more than 250% of gross domestic product from 150% at the end of 2006.

"I believe the overall policy tone has turned to risk management as the authorities are concerned about asset bubbles," said Singapore-based economist Zhou Hao at Commerzbank, predicting that the government will throttle back its aggressive stimulus before the end of the year.