China's Industrial Production Contracts in November

China's Purchasing Managers' Index fell below 40 in November from 45 a month ago, signaling further slowdown in industrial activities in the country. A reading of below 50 indicates contraction. The statistics came from the China Federation of Logistics and Purchasing, which conducts a survey each month of more than 700 firms in 20 industries including energy, metal, auto, and electronics.

While there have been early signs of the Chinese economy losing steam, the pace of the recent slowdown could be setting off alarms. Export, output, and new orders all shrank at the fastest pace since the survey started three years ago. For instance, the subindex for export orders declined to 29 in November from 41, and that of output dropped to 35 from 44. After two months of deteriorating economic numbers in October and November, many observers now believe that GDP growth for the fourth quarter will slip below 9%, and that China will face an uphill battle to maintain its GDP growth at above 8% for 2009.

Market Recap
Massive rate cuts and top officials' talk on stabilizing the Chinese financial market served to boost investor confidence, sending China's stock market on a week-long rally. The Shanghai Composite Index rose 7.88% to close at 2,019 points on Friday, while the Shenzhen Composite Index increased by 9.32% to 7,279.

Macroeconomic
China Lifts Food Price Control as Inflation Concerns Cool
China's top economic planner, the National Development and Reform Commission, made the announcement after inflation slowed to 4% in October and food prices stabilized. The control was imposed on prices of grains, vegetable oil, pork, dairy products, and other essential food items after rapid food price increases pushed up inflation to a historical high of 8.7% earlier this year.

China Subsidizes Rural Residents for Electronics Appliance Purchase
Starting on Dec. 1, rural residents in 14 provinces can get a 13% discount when buying electronics items such as televisions, refrigerators, washing machines, and mobile phones. The prices for eligible items are capped at $300 for TVs and washing machines, $365 for refrigerators, and $145 for mobile phones. The ministry of finance said the discount program will expand to cover rural residents across the country next February.

Industrial
China Sets Up Venture to Develop Hybrid and Electric Cars
The $300 million venture will be located in Shanghai and funded by China's largest automaker, SAIC Motor Group, and its parent company Shanghai Automotive Industry Corp.

China's First Private Airline Suspends Passenger Flights for One Month
Okay airways, which started operation in 2005, this week announced the suspension of all passenger flights starting in mid-December. The small airline was reportedly in dispute with controlling shareholder Junyao Group, and the dispute was further worsened recently by Okay's financial distress as travel demand slid in China. In November, financial problems led another privately run Chinese airline, United Eagle Airlines, to suspend flights on two routes.

Iris Tan, Peter Liu, and Feliz Li contributed to this article.