Figures show Chinese economy cooling

China’s industrial growth slowed further in July as Beijing clamped down on a credit boom, bolstering expectations it will ease monetary policy to shore up its economic expansion.

Inflation spiked to its highest level this year as summer flooding wrecked crops but analysts said the increase will likely prove temporary.

The government data today added to signs China’s booming economy is cooling and fuelled expectations Beijing needs to reverse course after imposing lending curbs this year to prevent a bubble in stock and real estate prices.

“This tells us economic growth is continuing to slow,” said economist Zhu Jianfang of Citic Securities in Beijing. “If they don’t make changes, the economy will see a danger of further sliding.”

Economic growth slowed from a blistering 11.9% in the first three months of the year to 10.3% in the second quarter as Beijing rolled back its stimulus and clamped down on bank lending.

Chinese leaders said they want to steer growth to a more sustainable level, but the slowdown was sharper than many analysts expected.

July growth in factory output slowed for a fifth month to 13.4% more than a year earlier, its lowest level this year. Retail sales and investment in factories and other fixed assets also slowed.

The consumer price index, or CPI, rose 3.3% over a year earlier, its fastest rate this year as summer flooding wrecked crops and disrupted shipping. The jump was driven by a 6.8% surge in food costs.