Industrial output grew a strong 16.9 percent year-on-year during
the first two months of this year, the National Bureau of
Statistics (NBS) announced
on Tuesday.
Although the rise was limited to 7.6 percent in February, when
the country celebrated the week-long Lunar New Year holiday, output
surged 20.9 percent in January. Total value of industrial output
during the two months was 903.4 billion yuan (US$108.8
billion).
The metallurgical and electronics sectors were the biggest
contributors. Metallurgy output surged 26.8 percent in the period,
contributing 12.5 percent to the total growth rate, while
electronic products jumped 19.1 percent, accounting for 9.8 percent
of overall growth.
The figures were above most forecasts. Industrial output growth
had been largely slowing since it peaked at 23.2 percent in
February 2004, although increases in August and September raised
concerns that the effectiveness of economic cooling measures might
be fading.
The Asian Development Bank's senior economist Zhuang Jian
pointed out that although growth in the first two months was
strong, it is too early to say whether the figures indicate a real
rebound.
Zhang Xueying, a senior economist with the State Information
Center, said that the government nevertheless has to be on its
guard. "This means the government's macro-control measures have had
little impact on the speed of the economic development, although
the measures helped cool down investment. That's why the government
has decided to improve and beef up its macro-control measures this
year."
Liang Hong, an economist with Goldman Sachs (Asia), said strong
industrial production growth resulted mainly from strong export
demand.
Exports by industrial companies climbed 33.4 percent
year-on-year to 583.8 billion yuan (US$70.3 billion) during the
first two months.
Industrial output is an important indicator of economic growth,
contributing more than 50 percent to China's gross domestic
product. Industrial output gained 11.1 percent last year, while GDP
rose 9.5 percent.
"Given the data released so far, particularly today's industrial
production, we expect fixed asset investment to be on the firm side
as well when it is released today," Liang said. "We believe this
will give a clearer signal on firmer growth prospects for the
year."
Zhuang expects China's GDP to grow about 8.5 percent during the
first quarter, but Zhang believes the figure could reach 9.0
percent despite the constraints still imposed by bottlenecks in
energy and transportation.
The government has taken a series of measures, including
tightening credit and curbing unwanted fixed asset projects, to try
to cool the economy. The People's Bank of China (PBOC), the central bank,
raised the benchmark interest rate by 0.27 percentage point last
October, the first increase in nine years.
(China Daily, China.org.cn March 16, 2005)