China Industrial-Output Growth Slows

China’s industrial-output and fixed-asset investment growth unexpectedly slowed last month, putting a recovery at risk as the government copes with a property slump and rising bad loans.

Factory production rose 9 percent from a year earlier, the National Bureau of Statistics said today in Beijing, compared with June’s 9.2 percent pace, which was also the median estimate of analysts surveyed by Bloomberg News. Fixed-asset investment increased 17 percent in the January-July period and retail sales gained a less-than-projected 12.2 percent last month.

Earlier today, a report showed the broadest measure of new credit unexpectedly plunged to the lowest level since the global financial crisis. Today’s figures suggest Premier Li Keqiang will need to step up stimulus to meet his target for economic growth of about 7.5 percent this year.

Growth in retail sales compared with the 12.5 percent median projection of analysts surveyed by Bloomberg. The median estimate for fixed-asset investment excluding rural households was 17.4 percent expansion in the January-July period, after a 17.3 percent increase in the first half.

The benchmark Shanghai Composite Index of stocks was down 0.4 percent at 1:35 p.m. local time.

The Chinese government is trying to balance sustaining economic growth with containing financial risks from an explosion of shadow banking over the past few years.

Aggregate financing was 273.1 billion yuan ($44.3 billion) in July, the People’s Bank of China said today in Beijing, compared with the 1.5 trillion yuan median estimate of analysts surveyed by Bloomberg News. New local-currency loans of 385.2 billion yuan were half of projections, while M2 money supply grew a less-than-anticipated 13.5 percent from a year earlier.

China’s stimulus in the past has caused excessive gains in the nation’s leverage ratio, Ma Jun, chief economist with the research department of the People’s Bank of China, wrote in an article this month. From a long-term point of view, the country should focus less on gross domestic product and more on jobs, Ma wrote.

— With assistance by Xin Zhou

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