CHINA’S factory output slowed by more than expected in the first two months of the year in the face of a government tightening campaign and snowstorms that brought broad swaths of the country to a halt.

Annual growth in industrial production in January and February fell to 15.4 percent from 17.4 percent in December, marking the slowest pace since December 2006. It compared with economists’ average expectations of a 16.8 percent rise.

The slowdown coincides with a more rapid appreciation of the yuan in the past few months, which together with a global economic slowdown could dent overseas demand for made-in-China goods.

“The latest fall is obviously weather-related to an extent, but if you look at the trend, it’s been falling over the past few months relative to last year. We’re off the peak of the cycle,” said Dwyfor Evans, an economist at State Street Global Markets.

“What does it reflect? A combination of factors — the global slowdown and the monetary tightening that we’re seeing in China and the shift towards curbing bank lending.”

The government, battling nearly 12-year-high consumer inflation alongside rapid credit and money supply growth, would welcome a modest slowdown in production, at least in sectors that consume significant resources. Output grew by 18.5 percent last year.

Seeking to keep the economy from overheating, the central bank has raised interest rates six times since the start of 2007 and banks’ required reserves 11 times. (SD-Agencies)