Growth in China's industrial output slowed down in July in response to the central government's economic cooling measures.
Industrial output rose 15.5 percent year-on-year to 440.9 billion yuan (US$53.3 billion) in July, 0.7 percentage points lower than in June, according to the National Bureau of Statistics.
The bureau's monthly report indicated that strong growth continued in July in major energy products, raw materials and top-selling consumer goods, although expansion slowed compared with the previous month in these sectors as well.
Output of raw coal and crude oil grew 14.0 percent and 4.4 percent, respectively, year-on-year, with growth in both industries increasing from June. Electricity output rose 11.7 percent, slower than in June.
Growth in crude and rolled steel rose 20.3 percent and 18.5 percent respectively, 6.5 and 1.2 percentage points higher than in June.
Auto production in July increased 5.4 percent from a year earlier, with sedan production up 0.5 percent, which represented declines of 15.0 and 19.9 percentage points from the previous month.
For the first seven months, industrial output rose 17.3 percent to 2.9 trillion yuan (US$354 billion) from the same period of last year, according reports from state-owned and private industrial companies annual sales income exceeding 5 million yuan (US$600,000).
Economist Zhang Xueying of the State Information Center said the slower rate suggests the central government's macro-control measures have taken effect. "These measures have had a great impact on fixed asset investment and industrial output," he said.
China has implemented a series of measures since the second half of last year to slow excessive economic growth. They include raising bank reserve requirements three times and curbing unwanted fixed asset investment projects.
China Securities economist Zhu Jianfang agreed, saying, "Industrial growth in July was not high at all."
However, Zhang says that care must be taken that the declines in industrial output growth and fixed asset investment do not become too rapid.
"I’m worrying about the possibility of an abrupt economic slowdown," Zhang said.
The government wants to bring economic growth down from current levels, where many resources, such as oil, have been constrained, but he said it must stay above 7 percent to keep people employed.
"We need to prevent the downward trend from accelerating in the coming months," Zhang said.
Industrial output is an important indicator for gross domestic product. China's industrial output jumped 17.0 percent last year and GDP climbed 9.1 percent.
During the first half of this year, industrial output grew 17.7 percent year-on-year and GDP rose 9.7 percent.
Statistics bureau spokesman Zheng Jingping said the overall state of China's economic health is good. Expansion is fast but stable and economic efficiency has improved, while initial steps are being taken to deal with existing problem areas.
However, Zheng noted that the government must remain aware that those problems persist.
Energy and transport bottlenecks and rapid growth in fixed asset investments in some sectors are still troubling, he said.
(China Daily August 11, 2004)
