CHINA: economy keeps slowing in July
12.08.2010, 09:13Industrial output, a gauge of the Chinese economy, slowed to an eleven-month low growth of 13.4% year-on-year, drifting down further from a 13.7% growth rate in June, which provided more proof that the economy continued to decelerate after China's GDP growth cooled from 11.9% in Q1 to 10.3% in Q2.
The National Bureau of Statistics (NBS) attributed the cooling mainly to Beijing's tightening policies against some energy-consuming and environment unfriendly heavy industries such as metal and attempts to calm down the boiling real estate market. One important indicator was that raw steel output only grew 2% year-on-year in July, slumping from a gain of 21% in H1.
Meanwhile, consumer inflation became more worrisome, as CPI climbed up from 2.9% year-on-year in June to 3.3% in July, topping Beijing's guard line of 3%.
Anyhow, economists expect China's policymakers to keep to the loosening stance, or even take a step back from their tendency of tightening in Q2, because the priority now is to maintain reasonable economic growth and the pick-up in inflation mainly arose from the bad weather this year, especially this summer's floods, which ramped up food prices.
Now, most economists have held back from their early forecasts that Beijing will raise interest rates once or twice this year and instead anticipate China to release more liquidity into its banks in the coming months to prevent a hard landing.