China factories eye stronger fourth quarter, external risks remain

Thu Oct 25, 2012 1:34am EDT
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By Aileen Wang and Nick Edwards

BEIJING (Reuters) - China's factory output should grow faster in the last three months of 2012 than in the third quarter, though the recovery remains clouded by uncertainty in export markets, the Ministry of Industry and Information Technology said on Thursday.

Month-on-month improvements in output growth, an apparent turnaround signaled by a private sector survey of purchasing managers and an uptick in preliminary power generation data were all indications of a burgeoning recovery, the ministry spokesman and chief engineer, Zhu Hongren, told a news conference.

"The industry sector performance has shown signs of stabilization and we can see an even clearer growing trend from the month-on-month figures in the third quarter," Zhu said.

"Therefore, we expect that industrial output growth in the fourth quarter would be faster than that in Q3, which will help the country to achieve its annual economic growth target of 7.5 percent," he added.

But a ministry statement issued before the news conference began was focused more on the risks of weak external demand, rising production costs, financing strains and squeezed profit margins across China's industrial complex.

"The stabilization trend of China's industrial sector is not yet solid and we are still facing many challenges and difficulties to realize stable growth," the ministry's earlier statement said.

"Although export growth rebounded in September, it is still very difficult to see a stable growth in exports of industrial products in future due to shrinking external demand," the statement said.

A festering debt crisis in China's biggest foreign market, the European Union, has dented demand for goods coming off assembly lines in the vast factory sector and ultimately weighed on the domestic economy.   Continued...

A worker cleans the window of an apartment building at a residential area in central Beijing, October 24, 2012. REUTERS/Petar Kujundzic