World's workshop back in business, data show

       Chinese factory output growth surged to a 19-month high in October, showing the worlds thirdlargest economy has firmly put the worst of the global financial crisis behind it.
       Other figures released yesterday showed a dip in the pace of investment and loan growth as the impact of the initial burst from a bank-financed fourtrillion-yuan ($585-billion) economic stimulus package, announced a year ago,tapered off.
       Exports and imports also undershot market forecasts, falling from year-earlier levels for the 12th month in a row.
       But economists said China was maintaining the momentum of its recent recovery, which has made it a certainty that Beijing will surpass its target of 8%growth for 2009 as a whole.
       Whats more, the large number of investment projects still in the governments pipeline, a sharp rebound in real estate spending and the huge volume of loans issued this year virtually guarantee stronger GDP growth in the coming year.
       Industrial output rose 16.1% in the year to October, the fastest pace since March 2008 before the global downturn brought Chinas export-orientated factories to their knees.
       The figure, up from Septembers reading of 13.9%, easily beat market forecasts of 15.5% growth.
       Factory output is a crucial gauge because industry generates about 43% of Chinese gross domestic product, a larger share than services.
       A battery of energy and commodity data for October confirmed the strength of the sector:
       Power generation in the year to October increased 17.1%, the fastest growth in 19 months.
       Crude steel output was equivalent to an annualised 609 million tonnes,22%higher than 2008.
       Output of refined copper and primary aluminium hit a record for the second straight month.
       The volume of refined crude oil rose 10.4% from a year earlier to a fresh high.
       Trade, by contrast, was weaker than economists had expected.
       Exports in October were down 13.8%from a year earlier, an improvement on Septembers 15.2% fall but short of the median market forecast of a 13.2% drop.
       And imports were down in dollar value by 6.4% from October 2008, compared with forecasts of a 1.0% fall and compared with a 3.5% year-on-year decline in September.
       As a result, the October trade surplus ballooned to $24 billion, a reminder ahead of US President Barack Obamas visit to China next week of the imbalances plaguing the global economy.
       Because global trade fell off a cliff last November after the shock to confidence delivered by the bankruptcy of investment bank Lehman Brothers, economists still think exports will resume positive year-on-year growth by December at the latest.
       This will make it more difficult for Beijing to resist international pressure to let the yuan appreciate and also make it easier for policymakers to justify a stronger currency to domestic audiences, said Brian Jackson, a strategist at Royal Bank of Canada in Hong Kong.
       A stronger currency would help to rebalance the Chinese economy by steering resources away from exports and related investments and towards domestic, consumption-related sectors.
       To that end, policymakers will take comfort from a surprising acceleration in retail sales growth to 16.2% in the 12 months to October from 15.5% in September, handily outstripping market projections of a 15.8% rise.
       By contrast, year-to-date urban investment in fixed assets such as factories and property eased to 33.1% from 33.3%in the first nine months. Economists had forecast 33.5%.
       Looking at trends, consumption is accelerating, while investment is decelerating. The change is pretty modest but it is an interesting trend to see and is positive in the sense of really being what the government wants, said Jun Ma,chief China economist at Deutsche Bank in Hong Kong.
       Deflation eased in October, but not by as much as expected. Consumer prices fell 0.5% in the year to October, with producer prices down 5.8%.
       A sharp drop in new lending, to 253 billion yuan in October from 516.7 billion yuan in September, was partly a seasonal phenomenon but might have reflected regulatory pressure to curb loan growth,said Zhou Xi, an economist with Bohai Securities in Tianjin.