China’s industrial output up 15.4 pct in first two months

BEIJING - China’s industrial production cooled down in early 2008 on weakening exports and the worst winter weather in half a century, official data showed Thursday.

By (AFP)

Published: Thu 13 Mar 2008, 1:49 PM

Last updated: Sun 5 Apr 2015, 1:19 PM

Industrial output, a measure of factory production in the world’s fourth-largest economy, expanded by 15.4 percent in January and February from the same period a year ago, the National Bureau of Statistics said.

That compares with a growth rate of 18.5 percent in the first two months of 2007. Industrial output also grew by 18.5 percent for all of last year.

‘It has slowed down since the second half of last year,’ said Song Guoqing, a Beijing-based economist with the China Centre for Economic Research, a think tank. ‘(It shows) economic growth is slowing down.’

The apparent weakening in industrial production could reflect a slightly worse outlook for exports, which are a key driver of factory output in China, according to economists.

China’s exports rose by just 16.8 percent in the first two months of this year, according to government data released earlier in the week.

This compared with 41.5 percent growth in exports in the same period in 2007.

The problems in the US economy are said to be contributing to weakening exports, which saw China’s trade surplus shrink to 8.56 billion dollars in February, a third of the figure a year earlier.

‘Exporters are facing big problems and they are unable to make profit,’ said Andy Xie, an independent economist based in Shanghai.

‘(This is) partly because of the appreciation of the yuan and another significant reason is the increases in raw material prices.’

The Chinese currency, the yuan, has strengthened by about three percent since the beginning of the year, in a rise seen as engineered by policy-makers to accommodate foreign requests for a smaller Chinese trade surplus.

Another reason for the weakening industrial growth was the worst winter weather in decades, which stifled transportation networks for several weeks in late January and early February, economists said.

Observers said the coming months could see further slowdowns in industrial output growth as the government seeks to cool inflation, which hit a near 12-year high of 8.7 percent in February.

‘With heightened inflation risks, we expect further tightening measures by the government coupled with a gradual softening in exports will likely lead to downward pressure on industrial activities in the coming quarters,’ investment bank Goldman Sachs said in a research note.

Production of sedans reached 820,000 units in the first two months, an increase of 10.0 percent from a year earlier, the statistics bureau said.

China reports most economic statistics for January and February combined, without providing separate figures for each of the two months, to avoid the distorting effect of the Lunar New Year holiday.

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