On the back of the disappointing flash PMI data we brought you yesterday, China said on Thursday that factory growth in 2012 is likely to fall by 1 to 2 percentage points from this year, due to weakening global demand.

The Ministry of Industry and Information Technology suggests industrial growth could be around 9 to 10 percent next year, as it has predicted an 11 percent expansion for this year.

A deputy director at China’s Ministry of Industry and Information Technology says the lower factory growth outlook is due to economic turmoil in Europe and US, combined with the weakening demand at home. Huang Libin said: "In the January to October period this year, industrial production grew by 14.1 percent. It was 14.4 in the first quarter, 14 percent in the second quarter, 13.8 percent in October. Growth will moderate, but the sector will still run at a steady and relatively fast pace."

Huang added that China’s economy is facing other challenges as well - including a liquidity squeeze, climbing costs and exchange rate risks. An official from China’s leading think tank is optimistic.

Jin Pei, director from CASS, Institute of Industrial Economics, said: "I think the growth rate is within an acceptable range. it’s still at a relatively high level, but the trend is slowing...I think factors like outdated technology and rising costs will not cause the downfall of China’s manufacturing sector. The room for growth is still ample in the mid to long-run."

Huang Libin pointed out that industrial profits are falling in some of China’s booming eastern regions.

Source:cntv.cn