Improved air quality has come at a cost for China

Financial Data which emerged from China last week has highlighted the continuing downward pressure facing the major Asian economy. China's industrial output rose 7.7% in October from a year ago, while retail sales grew 11.5% in the same period. Economists predicted a growth of 8% and 11.6% respectively.

Improved air quality has come at a cost for China

Financial Data which emerged from China last week has highlighted the continuing downward pressure facing the major Asian economy. China's industrial output rose 7.7% in October from a year ago, while retail sales grew 11.5% in the same period. Economists predicted a growth of 8% and 11.6% respectively.

Fixed asset investment is another important economic indicator which fell from 16.1% in September to 15.9% in October. This, added to the fact that China's growth slowed to a more than five-year low in the third quarter from a year earlier, is building the case for more stimulus from the government to prevent an even worse slowdown.

Dariusz Kowalczyk, economist at Credit Agricole states "Industrial output slowed to 7.7% year-on-year, the second weakest pace since the Lehman crisis, likely as a result of pre-Apec factory closures. The Apec summit decided that the air pollution in Beijing was "very unhealthy and borderline hazardous" so improving the environment and air quality has come at a cost for the economy evidently.

This downturn will encourage further monetary easing." While calls for more easing from the government have been around for some time, Beijing has yet to step in with major support measures. "We do not expect major new stimulus steps unless growth takes a major turn for the worse or the labour market gets hit more seriously", according to Louis Kuijis, an economist from RBS bank.


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