China's Industrial Production Growth Slowed to 16.2%

2004-07-09

导读：
中国工业产出增长6月份减缓至比去年同期增16.2%，5月份的增长是17.5%。数据显示，信贷控制促使工业增长的减缓。
经济学家说，数据进一步显示，中国经济正在冷却，但是增长步伐依然很大，宏观调控措施完全落实还需要更多的时间。

China's industrial production growth slowed in June for a fourth month, adding to evidence that government lending curbs(信贷控制) are cooling the world's fastest-growing major economy.

Production rose 16.2 percent from a year earlier after gaining 17.5 percent in May, the National Bureau of Statistics said in a statement in Beijing. The growth rate, which peaked at 23.2 percent in February, is almost triple the rate in the U.S., the world's largest economy.

"Clearly the measures are working," said Qu Hongbin, an economist at HSBC Holdings Plc in Hong Kong. "Production is slowing but not collapsing."

The slowdown is damping export growth in Asian neighbors including South Korea and Taiwan, which are relying on overseas sales to revive their economies. It's also reducing pressure on China's central bank to raise interest rates for the first time in nine years.

"It seems there isn't a need to roll out more measures," said Louis Wong, who manages $25 million at Phillip Asset Management (H.K.) Ltd. "The government expects second-half growth to slow to a more sustainable level."

The Hang Seng China Enterprises Index, which tracks 37 mainland companies, or H shares, closed 0.3 percent higher in Hong Kong at 4315.30. The increase in China's June production was slightly less than the median 16.5 percent gain forecast in a Bloomberg News survey of seven economists.

Slower Growth

The yield on China's benchmark 10-year government bond ended the day little changed at 4.62 percent in Shanghai. It peaked at more than 5 percent in May as investors bet the central bank would raise its one-year lending rate from 5.31 percent. The rate was last increased in 1995 and hasn't been changed for more than two years.

China's economy, Asia' biggest after Japan, expanded 9.8 percent from a year earlier in the first quarter, barely slowing from a 9.9 percent pace in the previous three months and outpacing growth in the rest of the world's 20 largest economies.

Premier Wen Jiabao aims to slow economic growth to 7 percent this year, from a seven-year high of 9.1 percent in 2003, and has ordered banks to curb lending to industries including steel, autos and real estate to help achieve this goal. The central bank has raised the amount of cash banks must set aside as reserves three times since September.

Cars Sales Slump

Wen said last month that the measures are having their intended effect and a gradual slowdown will be achieved. There is a risk China's $1.4 trillion economy will slow more sharply than the government wants, according to Andy Xie, an economist at Morgan Stanley.

"The Chinese economy is like a supertanker," said Xie. "Once it turns, it turns and there's nothing you can do about it."

Growth in fixed-asset investment, which accounts for about half of the nation's gross domestic product, almost halved to 18 percent in May and M2 money supply had its smallest gain in 1 1/2 years, official figures show.

Passenger car sales grew in June at their slowest pace in almost two years as government restrictions on bank loans sapped demand, the Shanghai Daily said yesterday, citing the China Association of Automobile Manufacturers.

Hong Kong's Standard newspaper last week reported that Brilliance China Automotive Holdings Ltd., which makes cars with Germany's Bayerische Motoren Werke AG, had a 30 percent slump in sales in May. Wu Xiaoan, Brilliance China's chairman, blamed the sales decline on the government's lending curbs, the English- language newspaper said.

Imports

Central bank Governor Zhou Xiaochuan yesterday rejected complaints that the measures to rein in economic growth have been too harsh and said regulators need to maintain vigilance. He declined to comment on interest rates.

China's import growth slowed to 35 percent in May from 43 percent the previous month and Robert Subbaraman, an economist at Lehman Brothers Japan Inc. in Tokyo, predicts slowing demand from China will help almost halve economic growth in Asia outside of Japan to 4.7 percent in the second half from an estimate 8.3 percent in the past six months.

South Korean exports to China rose 52 percent from a year earlier in the first 20 days of June, less than the 92 percent gain achieved in the same period of May. Taiwan's exports to China increased 36 percent last month, after climbing 55 percent in May.

Power Cuts

Even as China's lending curbs bite, power shortages are still a problem in the world's most-populous nation. About 24 of China's 31 provinces have been affected by outages as economic growth averaging 9 percent in the past decade and surging industrial expansion creates demand that has outstripped generating capacity.

Last month's industrial production was worth 461 billion yuan ($55.7 billion), an all-time high, today's report showed.

China's stainless steel factories, including two of the three largest, may be forced to cut output because of a power shortage, causing the producers to lose out on an increase in stainless steel prices.

Ningbo Baoxin Stainless Steel Co. said it will get only half of the electricity it needs in July, which means it will have to cut production by 60 percent to 12,000 metric tons compared with a month earlier. Zhangjiagang Posco Co., a joint venture of South Korea's Posco and Jiangsu Shagang Group, is cutting a sixth of its stainless steel output to 25,000 tons a month from 30,000 tons.

Steel, Cement

"We are trying to make up for the lost production by operating at full capacity in days we have the power," said Ni Haidong, a sales manager at Ningbo Baoxin which is 54 percent owned by Baoshan Iron & Steel and 20 percent by Japan-based Nisshin Steel Co.

Output of steel products increased 17.3 percent in June, 3.3 percentage points less than in May, today's statement said. Cement production grew 13 percent after gaining 16.9 percent in May, it said.

In the first six months of this year, China's industrial production rose 17.7 percent to 2.47 trillion yuan, Mainland Marketing said. That outpaced a 15.8 percent increase in electricity generation, which was the biggest gain since 1975 and 6.7 percentage points more than the average growth in the past 90 years.

For June alone, electricity generation increased 14 percent to 175 billion kilowatt hours, today's statement said.