International | Dec 15 2008
By Rudi Filapek-Vandyck
In case you were still holding out for some kind of extraterrestrial miracle: the Chinese economy has joined the rest of the world in releasing much worse than expected economic data. Today’s release of industrial production data for November has again highlighted this reality.
According to China’s statistics bureau, industrial production rose only by 5.4% in November compared to a year earlier. Market expectations were for a figure in the vicinity of 7.2%. This compares with IP growth of 8.2% in October. Bloomberg news reports none of 14 economists surveyed ahead of the data release had predicted such a small increase.
Expectation is now that the Chinese central bank will continue its aggressive monetary loosening policy. Meanwhile, economists continue lowering their growth projections for China next year. Even before today’s release, Goldman Sachs last week cut its 2009 growth forecast for the country to 6% from 7.5% previously. This would imply China will experience a hard landing next year.
The November industrial production figure is reportedly the lowest since data collection began in 1999. AFX Asia quotes Qi Jinmei, Senior Economist at the State Information Centre in Beijing as saying “I don’t think there are any signs the drop will stop. Next year will be a really harsh year.”
The same news service quotes Ben Simpfendorfer, a Strategist with the Royal Bank of Scotland in Hong Kong as predicting: “Five percent GDP growth in the first half next year is now a reality, not a risk. There’s little doubt the data will look ugly over the next six months. Nonetheless, as inventory drawdown eases and the fiscal package gains traction I’d expect to see signs of economic stabilisation in the second half of next year.”