July slowdown, but economy is still on track

Updated: 2011-08-10 09:48

By He Wei (China Daily)

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Industrial output declines to 14%, says National Bureau of Statistics

July slowdown, but economy is still on track

SHANGHAI - China's major economic indicators slowed in July, but signaled the country's growth engine remains on track, analysts said.

The year-on-year growth in industrial output decelerated slightly to 14 percent in July, 1.1 percentage points lower than in June, the National Bureau of Statistics announced on Tuesday.

However, that figure is still higher than the historic low of 13.3 percent registered in May. Industrial production grew 14.3 percent from January to July, maintaining the pace set in the first half of the year.

Meanwhile, fixed asset investment, a primary driver of economic growth, soared by 25.4 percent year-on-year during the first seven months of the year to 15.24 trillion yuan ($2.36 trillion).

That was slightly lower than the reading of 25.6 percent recorded in June.

Investment in the nation's property sector rose 33.6 percent year-on-year.

Retail sales followed a similar pattern, rising a solid 17.2 percent year-on-year, but still lower than June's gain of 17.7 percent.

While the figures failed to meet overall market expectations, analysts remained cautiously optimistic about the country's economic growth momentum.

"Fixed-asset investment growth is quite robust and retail sales appear brisk in terms of year-on-year growth," said Zhou Hao, an economist with the Australia and New Zealand Banking Group Ltd.

In general, the figures have remained "healthy" even if they continue to moderate in July, according to Benny Lam, an associate director and economist at CCBI Securities Ltd. China plans to build 10 million units of low-cost housing this year, to address the difficulties faced by an estimated 30 million people.

The move will help to shore up the property sector that is suffering from policy tightening.

"We believe that large-scale construction of low-cost housing will be a major driver for the country's economic growth," Jing Ulrich, chairman of global markets for China at JP Morgan Chase & Co, wrote in a research note.

Zhou believes the prospects for the Chinese economy are promising.

The only factor likely to raise concern is whether the country's exports, data about which are scheduled to be released on Wednesday, will slow in the face of possible weaker demand from the United States following its debt downgrade by Standard and Poor's, in addition to the lackluster European economy.

However, Ken Peng, senior economist at BNP Paribas SA, told Reuters that the indicators show that "China's growth has continued to slow, and because of weaker external demand it will continue to slow in the coming months".

Xinhua contributed to this story.

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