- Dariusz Kowalczyk, senior economist at Credit Agricole CIB
The Chinese economy continued to lose steam in October, with factory growth slowing and investment growth falling to a near the lowest level in 13 years, reinforcing the view China's government will have to take further steps to combat slackening growth. Tepid business activity in factories in recent months as well as weakening housing market put Beijing's 2014 growth target of 7.5% under risk. Production from the world's second biggest economy's mines, manufacturers and utilities rose 7.7% in October compared with the same period last year, coming in against analysts' predictions for a 8.0% growth. In addition to that, the National Bureau of Statistics reported fixed asset investment slowed to 15.9% year-to-date in October, compared with the 16.1% increase in the preceding month. That was the weakest pace of growth since December 2001. Retail sales also fell to 11.5%, recording the lowest level since early 2006. The data came on heels of reports this week which showed inflation stayed near a five-year low, while producer prices declined for 32nd consecutive month, highlighting sluggish domestic demand.
Despite a bunch of stimulus measures, China's annual economic growth declined to 7.3% in the third quarter, the weakest pace since the global financial crisis. Many economists believe additional support measures may be required to offset the drag from the cooling housing market.
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