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China Industry December 2021

China: Industrial output growth gains steam in December

Industrial output grew 4.3% year-on-year in December (November: +3.8% yoy), above market expectations. Output was likely aided by a lessening of producer price pressures. Looking at the details of the release, manufacturing output increased at a quicker pace in December, while energy output lost momentum amid the government’s bid to achieve clear skies ahead of the upcoming Winter Olympics.

On a monthly basis, industrial output grew 0.4% in seasonally-adjusted terms in December, matching November’s expansion and marking the best result since June. Meanwhile, the trend pointed down, with the annual average growth of industrial production coming in at 11.5%, down from November’s 11.7% reading.

Looking forward, industrial activity will likely be dampened in the near term by the Winter Olympics, which will lead to curbs on factory output. Omicron also threatens to weigh on the sector, although easing producer price inflation and looser monetary policy should provide support.

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