Workers operate machinery on the assembly line at a factory in Huizhou, Guangdong province, China. (Photographer: Qilai Shen/Bloomberg)

China Factory Output, Investment Slow While Consumption Firms

(Bloomberg) -- China’s factory output and investment growth edged down amid a nationwide pollution cleanup campaign and a drive to rein in borrowing, while retail sales growth held up.

Key Points

  • Industrial output climbed 6.1 percent from a year earlier in November, in line with the projection in Bloomberg’s survey and edging down from 6.2 percent the prior month
  • Retail sales rose 10.2 percent from a year earlier, less than the estimated 10.3 percent and compared with 10 percent in October
  • Fixed-asset investment excluding rural households increased 7.2 percent in the first 11 months of the year over the same period in 2016, in line with estimates
China Factory Output, Investment Slow While Consumption Firms

Big Picture

An intensifying pollution crackdown is weighing on industrial output as authorities also push ahead with a drive to reduce borrowing, adding greater pressure on investment growth. Consumers remain a key growth prop, with e-commerce giant Alibaba Group Holding Ltd. pulling in a record $25 billion in sales during the Singles’ Day shopping bonanza last month. Any dollar strengthening on the back of tighter U.S. monetary could prompt the People’s Bank of China to more aggressively raise rates after its surprise increase Thursday.

Economist Takeaways

"Overall economic growth held up well in November, benefiting from stronger exports and resilient real estate activity," Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong, wrote in a note. "Recent statements by policy makers confirmed a gradual shift in the macro policy stance towards somewhat less emphasis on growth and more on reducing financial risk and deleveraging parts of the financial system."

"All the key activity indicators have been very stable," Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said in a Bloomberg Television interview. Speaking just after the PBOC move, he added that if domestic growth accelerates and the dollar strengthens, China may need to raise its benchmark rate. "If the pace of Fed rate hikes affects the dollar and Chinese capital outflows, that will change the mindset of the PBOC," he said.

"The expected rebound after the Party Congress didn’t materialize and external demand seems quite stable," said Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong. "There could be further downside for the first quarter next year."

“The economy is stable and resilient, and China is taking advantage of such a sweet spot to cut pollution," National Bureau of Statistics spokesman Mao Shengyong told reporters after a briefing in Beijing, adding that the economic impacts of pollution rules and a coal-to-gas shift aren’t yet clear.

Bloomberg Economics

"Data point to continued robust growth momentum into year-end," Fielding Chen, a Bloomberg economist in Hong Kong, wrote in a note. "The combination of strong credit expansion and continued solid growth adds some urgency for the PBOC to lean against leverage in the economy -- as indicated by Thursday’s surprise move to nudge market rates a touch higher."

The Details

  • Property development investment rose 7.5 percent on year in the first 11 months
  • New home sales by value rebounded in November, climbing the most in five months
  • Furniture sales climbed 11.9 percent last month
  • The surveyed unemployment rate was about 4.9 percent with 12.8 million new jobs created in the first 11 months
  • Natural gas production last month jumped to the highest since March as the producers scrambled to meet surging demand amid a government push to replace coal with gas

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at, Enda Curran in Hong Kong at

©2017 Bloomberg L.P.

With assistance from Xiaoqing Pi, Enda Curran