CHINA’S COOLING

CHINA INFLATION DROPS TO 4.2 PCT IN NOVEMBER

Elaine Kurtenbach

Associated Press, December 9, 2011

SHANGHAI (AP) — China's economy is losing steam, with industrial production dropping to its slowest pace in two years last month and inflation also cooling — raising the likelihood of fresh moves to keep growth on track.

A decline in inflation to 4.2 percent in November from 5.5 percent the month before, reported Friday, will allow authorities more flexibility in easing policies that were imposed to cool the overheated economy but now may pose a threat to growth.

The National Bureau of Statistics reported that industrial output rose 12.4 percent in November, its slowest increase in two years.

China's ability to help offset the malaise in Europe and the U.S. will depend on its ability to support growth while avoiding a relapse into higher inflation that undermines the economic gains underpinning support for the ruling Communist Party.

A recent surge in labor unrest 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 that will set policy for the coming year. But the support will be tempered by concern that too much stimulus could touch off another round of excess investment and inflation.

In one indication of that risk, the statistics bureau reported retail sales rose 17.3 percent year-on-year in November, up slightly from October, suggesting sustained demand in China's domestic market even as exports to crisis-stricken Europe falter

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