BEIJING • China's economy largely showed further signs of steadying in October as expected, but disappointing retail sales growth and fears of US trade frictions under incoming President Donald Trump are increasingly clouding the outlook.

Industrial production rose 6.1 per cent from a year earlier in October, compared with 6.1 per cent in September. Retail sales growth slowed to 10 per cent, missing estimates for 10.7 per cent. Fixed-asset investment rose 8.3 per cent in the first 10 months of the year, beating expectations in January-October as the government stepped up infrastructure spending to support growth, official data showed yesterday.

A number of other indicators released over the past week from exports to bank lending, as well as expectations of a slowdown in the heated property market, suggest economic momentum may falter in the months ahead.

"On balance, today's data suggests that the recent recovery in economic activity continued into the fourth quarter," Capital Economics said in a note. "We expect growth to hold up well for another quarter or two. However, with credit growth now slowing and the property market beginning to cool, the drivers of the recent recovery look set to fizzle out early next year."

China's leaders have depended on a surging real estate market and government infrastructure spending to drive activity this year and look set to meet their growth target of 6.5 to 7 per cent.

The construction boom in turn has helped perk up the ailing industrial sector, spurring demand for materials from cement to steel. But top policymakers and investors are also clearly growing more concerned about the risks of prolonged debt-fuelled stimulus. China's overall debt has jumped to more than 250 per cent of gross domestic product from 150 per cent at the end of 2006.

"I believe the overall policy tone has turned to risk management as the authorities are concerned about asset bubbles," said Singapore-based economist Zhou Hao at Commerzbank, predicting that the government will throttle back its aggressive stimulus before the end of the year.

Separately, the Finance Ministry said that fiscal spending slumped 12.5 per cent from a year earlier. That's because of an unfavourable comparison to the prior October, which included a surge of spending on urbanisation and transportation infrastructure to stabilise the economy, officials said in a statement.

REUTERS, BLOOMBERG