COMPANY PRODUCT INQUIRY INFORMATION COMMUNITY NEWS Welcome to Wanjoo Metals       HOME > CUSTOMER CENTER > NEWS TITLE  Chinese industrial growth at 7-year low WRITER   administrator DATE   2008-11-14 09:25:39 Chinese industrial growth at 7-year low By Geoff Dyer in Beijing, November 13 2008 The extent of the slowdown in the Chinese economy became clearer on Thursday when the government disclosed that the rate of increase of industrial production had dropped to the lowest level in seven years. Four days after unveiling a massive fiscal stimulus programme, the government said that industrial production increased by 8.2 per cent in October – well below forecasts and following on from an increase of 11.4 per cent the month before and 17.8 per cent in March. While the slowdown was evident in every sector apart from oil, steel production dropped 17 per cent compared with October last year. Power generation fell for the first time in a decade. Ken Peng, an economist at Citibank, said that the slowdown in production growth was even more rapid than during the Asian financial crisis a decade ago. “The data underscore why risks of 5 per cent GDP growth remain real. We need to see evidence in the coming months that fiscal easing has gained traction to avoid 5 per cent from becoming a reality,” he said. The Chinese economy grew at double-digit rates in each of the past five years. In the past week, however, the government has said that house prices dropped relatively sharply in October, the pace of increase in imports slumped and retail sales also showed signs of weakening demand. Economists said that it was these figures that had prompted the government to announce its fiscal stimulus plans earlier than had been expected. On Sunday, the government said it would spend Rmb 4,000bn ($587bn, €468bn, £384bn) on infrastructure and social welfare over the next two years, in an effort to restore consumer confidence and prevent the economy from slowing even more dramatically. On Wednesday, the government cut taxes on a large number of exports. Ha Jiming, an economist at China International Capital Corporation, said the slowdown in production reflected weakness in both the export sector and real estate, two of the economy’s main engines of growth. “The pattern of development in China, which has been focused on heavy industry, has caused severe overcapacity. Both the production of basic materials and power generation will suffer a hard landing once the economy slows down,” he said. The government also said that fiscal revenues, which increased by 33 per cent in the first half of the year, decreased by 0.3 per cent in October, the first time that had happened since 1996. Weaker fiscal revenues would likely force the government to use substantial bond issuance to finance its fiscal spending plans, economists said. The eventual impact of the fiscal package remains highly uncertain, in part because the government has given little detail on how exactly the money will be spent and because it is not clear how much of it will be extra investment that would not otherwise have been spent. Economists say it is also unclear how quickly some of the spending on infrastructure will begin to have a real economic impact. [ L I S T ] WanJoo Metals All rights reserved. TEL : +82-2-585-2581, 2571,   FAX : +82-2-585-2587, 8799 FL.2 DaedeokPlaza Bldg, 206, Geumgok-Dong, Bundang-Gu, Seongnam-Si, Gyeonggi-Do 463-480, Korea