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China’s Industrial Production Struggles to Regain Strength

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China’s industrial production rose 5.6% in October

Manufacturing activity accounted for about 31.0% of China’s GDP (gross domestic product) in October 2015. According to the National Bureau of Statistics of China, industrial production in China rose 5.6% in October compared to 5.7% in September. The reading was below market expectations of 5.8%.

The iShares China Large-Cap ETF (FXI) and the Direxion Daily FTSE China Bull 3X ETF (YINN) fell 4.4% and 32.4%, respectively, as of November 11, 2015, from a year ago.

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Manufacturing activity led industrial growth in October

An increase in industrial production was mainly due to a 6.7% rise in manufacturing activity followed by an increase in mining and quarrying by 0.4%. Utilities fell by 0.3% year-over-year in October. Mining stocks such as China Shenhua Energy (CSUAY) and Aluminum Corporation of China (ACH) have fallen 39.7% and 28.9%, respectively, as of November 11, 2015, from a year ago.

In terms of sectors, 37 industries within 41 industrial divisions kept year-over-year growth. The manufacture of non-ferrous metals increased 12.1%, followed by an increase in the manufacture of computer equipment, medicines, and motor vehicles by 11.7%, 10.0%, and 7.3%, respectively, over the past year.

Technology equipment stock for Actions Semiconductor (ACTS) rose 2.9%. China Digital TV Holding (STV) fell 46.1% from a year ago as of November 11. Mobile companies China Mobile (CHL) and China Unicom (CHU) fell 4.8% and 14.7%, respectively, over the same period.

Chinese industrial growth is experiencing a downturn with a significant decline in trading activities. Imports and exports have fallen 18.9% and 6.9%, respectively, over the previous year. Declining order book and production levels are keeping industrial growth lower for China. However, a pickup in retail sales and an increase in capital spending suggest that the economic sentiment is improving and may help it achieve its 7.0% annual growth target.

To find out more, you can read Falling Foreign Trade Raises Concern over China’s Future Growth.

To remain updated on the economic front, you can refer to our Global ETF Analysis page.

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