China's economy slows

New figures show China's industrial production slowed to its slowest pace in two years in November.

The country’s National Bureau of Statistics Friday reported that industrial output rose 12.4 per cent.

In another sign that the world’s second largest economy is losing momentum, the government reported inflation cooled to 4.2 per cent last month from 5.5 per cent in October.

Still, the official Xinhua News Agency reported that the Communist Party's powerful Politburo agreed during its meeting Friday to keep to a "prudent" monetary policy.

That’s a catch phrase for keeping a lid on inflation.

Leaders were widely expected to remain cautious about stimulating growth given an upcoming leadership transition next year, the uncertain global situation and concerns over the potential for inflation to rebound.

China has experienced a surge in labour unrest recently and public dissatisfaction over the widening gap between rich and poor, corruption, pollution and other issues have added to jitters as the party prepares for a transition next year to a new generation of leadership.

Moves toward an easier monetary stance may come as early as next week at an annual economic work conference in Beijing next week that will set policy for the coming year could spell out measures to encourage growth, but China must try to balance that with the concern that too much stimulus could touch off another round of excess investment and inflation.

Escalating price increases remain a risk, given retail sales rose by 17.3 per cent in November compared with the same month a year earlier. That was up slightly from October.

China's latest bout of inflation was fuelled by a stimulus-led binge in bank lending in 2009 that helped fend off the global crisis. Much of it was squandered in excessive investments in construction and real estate.

China's economy has been slowing for most of the year, with growth expected to drop below nine per cent in 2012. GDP growth in the quarter that ended in September was 9.1 per cent.

With files from The Associated Press

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