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Decent SONIA Action Tuesday

--But NBS Says Slowdown 'Within Reasonable Range'
     BEIJING (MNI) - Industrial output growth slowed in October following a
surge in September and came in slightly below market expectations, hinting at a
broader slowdown in China's economy during the final quarter of the year.
     Industrial output grew 6.2% on an annualized basis in October, below the
MNI survey median for 6.3% growth and also below the 6.6% growth rate in
September, the National Bureau of Statistics (NBS) said Tuesday. The October
industrial output growth rate was the second lowest this year, only above the
August growth rate of 6.0%.
     On a seasonally adjusted basis, industrial output increased 0.50%
month-on-month in October, the same as last October but below the rate of 0.56%
in September and above August's 0.46%.
     For the January-October period, industrial output increased 6.7% on a
year-on-year basis, the same as the January-September period.
     The NBS said that industrial output remained "stable" and that the growth
slowdown in October was normal.
     "It is true that many indicators fluctuated [downward] compared with last
month," NBS spokesperson Liu Aihua said on Tuesday. "However, if we observe the
trend in the longer term and compare this month's data with last year's or with
previous months, we can see the fluctuation is within a reasonable range."
     Liu also said the foundation supporting China's steady growth has
solidified, and that the country's economic growth will be stable next year.
     "The mid-Autumn Festival was in October this year, so fewer working days
than last year had a negative impact on industrial output growth," Zhang Yiping,
an analyst at China Merchant Securities, said in a report. "Moreover, as
environmental protection pressures were strengthened, production of heavy
industries like steel were affected, causing industrial output growth to
     Steel production fell to 91.79 million tons in October, lower than the
93.56 million tons of output in September and 1.6% lower than the same period
last year.
     In October, output of state-owned enterprises increased 6.6% year-on-year,
lower than 9.0% growth in September but higher than the 3.2% growth last
     Manufacturing sector growth was 6.7% year-on-year, lower than the 8.1% gain
in September and the 6.8% growth rate in October 2016.
     "Lower export growth, which was 7.5% in October and 2.3 percentage points
lower than growth in September, has caused the manufacturing sector to grow
slower," Zhang said.
     Mining sector output declined 1.3% year-on-year, improving from the 3.8%
contraction in September and the 2.2% contraction posted last October.
     Production in the electricity, heating, gas, and water production and
supply sector rose 9.2% compared with the same period last year, higher than the
7.8% growth rate in September and the 7.9% growth rate last October.
     Primary aluminum production totaled 2.55 million tons in October, the
lowest since the NBS started to publish the data in 2016.
     The government's supply-side structural reforms were also reflected in the
output statistics. The production and sale of substandard steel products have
been banned, and 140 million tons of production capacity in substandard steel
has been eliminated.
     The debt-to-asset ratio of large state-owned industrial companies was 55.7%
as of October, compared with 56.3% in the same period last year, the NBS said.
--MNI Beijing Bureau; +86 10 85325998; email:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
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