Growth in China's factory output is likely to fall slightly to 12-13 percent in 2012 due to weakening global demand, the industry ministry said on Thursday, but that level probably still implies a comfortable GDP growth rate of 8-9 percent next year.
Annual industrial output in the world's second-largest economy is expected to grow 14 percent this year but activity at home and abroad is cooling as tight domestic monetary conditions and weak U.S. and European economies weigh on orders.
Many economists believe that if China's factory output grows by between 11-13 percent a year, it would be enough to avoid a hard landing and keep the economy growing at around 8-9 percent, the level at which China will be creating enough jobs to stem any public unrest.
Fears that China may be set for a sharp slowdown flared again on Wednesday after HSBC's flash PMI survey showed the factory sector shrank the most in 32 months in November on signs of domestic economic weakness. The results amplified concerns that the global economy may tip into recession.
The industrial production growth rate will show some moderation next year, judging from the domestic and external environment, Huang Libin, a senior official with the Ministry of Industry and Information Technology, said at an online briefing.
He predicted factory output growth in 2012 would be 1-2 percentage points lower than this year, but did not elaborate.
The official Xinhua news agency later cited Huang as predicting industrial production would grow 14 percent this year.
In October, the ministry forecast factory growth of 11 percent for this year and 2012 -- a long-standing outlook.
Growth in factory output hit its weakest pace in a year in October, even though expansion in the first 10 months of 2011 averaged 14.1 percent.
The purchasing managers' (PMI) survey implied annual industrial output growth in China will moderate in coming months to an annual rate of 11-12 percent, a pace not seen since 2009 when China was pulling out of the global financial crisis.
In addition to weakness in its key Western export markets and worries about the deepening euro zone debt crisis, China is also seeing a slowdown in its once red-hot real estate sector, with falling home prices and sales.
The economy faces relatively big downside risks but we haven't seen any signs of a hard landing. So conditions for an across-the-board policy easing are not ripe yet, said Qiao Yongyuan, an economist at CEBM in Shanghai.
He expects annual growth in factory output to ease to 12.5 percent in 2012 from this year's 13.7 percent.
The government would continue to rein in sectors with outdated technology and those that consume too much energy, Huang said.
The ministry expects China's economy to grow an annual 9.2 percent this year, and the pace could slow modestly in 2012.
China's economy grew 10.4 percent in 2010.
(Reporting by Kevin Yao; Editing by Jacqueline Wong & Kim Coghill)