China says industry recovery trend not yet stable


China's industrial sector is still not on a stable recovery track, particularly in export markets, the Ministry of Industry and Information Technology said on Thursday.

"The stabilization trend of China's industrial sector is not yet solid and we are still facing many challenges and difficulties to realize stable growth," the Ministry said in a statement released ahead of a scheduled news conference.

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China's industrial output in September grew 9.2 percent, picking up from a rise of 8.9 percent in August, and along with other economic data from exports to retail sales, signals that recovery is taking hold in the world's second-largest economy.

A jump in annual export growth in September to 9.9 percent, roughly twice the rate expected by investors, has led some analysts to conclude that recovery in the external sector is gathering momentum.

The Ministry sought to temper that analysis.

"Although export growth rebounded in September, it is still very difficult to see a stable growth in exports of industrial products in future due to shrinking external demand," the statement said.

The comment echoes that from Commerce Ministry spokesman, Shen Danyang, who said last week that one month's solid trade data was not sufficient evidence of a recovery trend given complications in the external sector.

External headwinds have been the main cause of the rapidly cooling growth in China's export-sensitive economy from 2011's 9.2 percent expansion, which analysts polled by Reuters expect to fall to 7.7 percent for the full year in 2012 - a 13 year low.

A festering debt crisis in China's biggest foreign market, the European Union, has dented demand for goods coming off assembly lines in the vast factory sector and ultimately weighed on the domestic economy.

Exports were worth 31 percent of GDP in 2011, according to the World Bank, and supported an estimated 200 million Chinese jobs.

Despite signs of a gentle improvement in the factory sector, annual industry output growth of 10 percent in the first nine months of 2012 is still below the Ministry's 11 percent target.

Premier Wen Jiabao said earlier this month that the economy is showing positive changes and the government is confident it can achieve its full-year economic growth target of 7.5 percent.

(Reporting by Aileen Wang and Nick Edwards; Editing by Jacqueline Wong)