Business

China factory output slows in April, as credit tightens

BEIJING: China's factories and workshops saw their output slow sharply last month, data showed yesterday, as the world's second-largest economy grapples with tighter credit and weaker demand.

Industrial production rose 6.5 per cent from a year ago, the National Bureau of Statistics said, compared with 7.6 per cent in March and analyst estimates of 7 per cent.

Other figures also disappointed. Last month's retail sales rose 10.7 per cent year-on-year, below the previous month's reading and market forecasts of 10.8 per cent.

Fixed-asset investment excluding rural areas rose 8.9 per cent in the first four months of the year, compared with 9.2 per cent in the January to March period.

"All the data sends the same message: The economy slowed down meaningfully in April," Mr Larry Hu, head of China economics at Macquarie Securities in Hong Kong, told Bloomberg News.

"But, given that growth is still fine, in the second quarter, policymakers will still focus on reducing financial risk."

In recent years, China has been transitioning from an investment-driven economic model to one more reliant on consumer spending, but it has been a bumpy ride.

The crucial manufacturing sector is also struggling in the face of weaker global demand and excess industrial capacity left over from a debt-fuelled infrastructure boom.

Years of unregulated and risky lending have also raised fears of a looming debt crisis that the International Monetary Fund has warned could "imperil global financial stability".

The banking regulator recently unveiled measures to strengthen institutional transparency.- AFP

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