P. M. BRIEFING : Production in China Drops 6.1%

BEIJING — China today announced its biggest drop in industrial production in a decade, saying January’s output value plunged 6.1% from a year earlier.

Foreign diplomats said the drop showed China’s 18-month-old austerity program is driving the economy into stagnation and added that the government might soon be forced to ease its tight credit policy.

The China Daily newspaper quoted new figures from the State Statistical Bureau showing industrial output in January fell to $27.2 billion.

It was only the second time that monthly industrial output had fallen in 10 years of economic reforms. The last drop was in October last year, when production slipped 2.1%.

China began its austerity program in September, 1988, to rein in runaway inflation. It has succeeded in bringing down annual inflation from a peak of 25.5% in early 1989 to around 7% now.