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Industry reports slowed growth
The growth of nation's industrial output further slowed last month, as the central government's economic cooling-off measures took effect. The National Bureau of Statistics said on Friday that the country's industrial output rose by 16.2 per cent in June compared with the same month of last year. The growth rate was 1.3 percentage points lower than the previous month. In May, industrial output growth dipped by 1.6 percentage points compared with April, earlier figures show. For the first six months, industrial output rose by 17.7 per cent from the same period of last year. Zhang Xueying, a senior economist with the State Information Centre, says the slower growth suggests that the central government's macro-control measures have kicked in. China took a raft of measures since second half of last year to try to cool down the economy, including raising bank reserve requirements three times and curbing unwanted fixed asset investment projects. "These measures have a great impact on fixed asset investment and industrial output," Zhang said. Zhu Jianfang, an economist at China Securities, agrees that the high industrial growth has been dragged down. "Industrial growth in June was not high at all," he said. "The growth could drop to as low as 14 per cent, if taking into consideration last June's low base of industrial output when the SARS (severe acute respiratory syndrome) epidemic broke out." The two economists say the fast decline in fixed asset investment and industrial output may suggest that the macro-control measures were too heavy handed. They expressed concern that the downward trend in industrial output and fixed asset investment could make the economy sluggish. Last month, the output of heavy industry grew by 17.4 per cent, which was 1.5 percentage points lower than May, according to the bureau. Cement production, a sector targeted by the government in its drive to reduce investment, rose by 13.2 per cent in June, which was 3.9 percentage points lower than the previous month. During the first six month of the year, electricity power production reached 990.9 billion kilowatt-hours, an increase of 15.8 per cent over the same period in 2003 and the highest rate since 1975. Industrial output is an important indicator for gross domestic product, or GDP. The country's industrial output grew by 17 per cent last year, and its GDP grew by 9.1 per cent. During the first quarter of this year, industrial output grew a year-on-year 17.7 per cent and the country's GDP rose by 9.8 per cent. Industrial output growth has been sliding, since it peaked in February, to 23.2 per cent following the government's steps to curb the high investment in sectors such as steel and cement. Economists and policy-makers were worried that several sectors were drawing too much investment, which could lead to overcapacity, hit corporate profits and trigger deflation. They believed that the overheating of some industries, including steel, aluminium, cement and the automobile sector, could have had a serious impact on the national economy. Excessive growth in some sectors was putting strain on transport and power suppliers, driving up the prices of raw materials and hitting industries across the country. |
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