Politic-Economic-Society-Tech

Global woes hammer China industrial output

BEIJING: China on Tuesday said that its industrial output rose a lacklustre 8.1 per cent year on year in August as the global slowdown stifled export growth.

The industrial production growth rate was the same as in July, when it was two percentage points down from June at its slowest rate in 18 months, the State Statistical Bureau said in a statement.

Analysts said that the August figure showed slowing export growth continued to hammer manufacturers, particularly foreign-funded firms relying heavily on overseas markets.

"The listless industrial growth is expected to last for some time as exports have yet to show signs of bottoming out," said Zhu Jianfang, senior economist at China Securities.

"The impact will be bigger for foreign-funded companies in coastal areas that export more goods than other firms," he said.

The value of delivered industrial exports rose 4 per cent year on year in August to 132.7 billion yuan ($16.03 billion), the bureau said. The growth rate was 1.3 percentage points higher than in July.

"This is the first recovery after successive declines in the past four months," it said.

August export figures have yet to be announced, but finance minister Xiang Huaicheng said on Tuesday that export growth was likely to be flat in the month.

Exports rose 6.6 per cent year on year in July, reversing a decline in June.

Industrial output still grew 10.4 per cent year on year in the first eight months to 1.7245 trillion yuan, underpinned by robust expansion in the first half of this year, the bureau said.

The value of output was 223.3 billion yuan in August.

Analysts expect the economy - which grew a healthy 7.9 per cent in the first half of this year - to slow in the second half as the government has limited means to stimulate exports as the global economy continues slowing.

"Room is limited for the government to boost exports as tax rebates have already been raised and credit supports to exporters are not that effective," Zhu said.

The average tax rebate for exporters has been raised to 15 per cent, leaving little room for further increases. The standard value-added tax is 17 per cent.

Finance minister Xiang Huaicheng predicted at the weekend the economy would grow 7-7.5 per cent this year compared with actual growth of 8 per cent in 2000.

Production by heavy industry rose 8.3 per cent year on year in August to 136.4 billion yuan, outpacing light industrial output which rose 7.8 per cent to 86.9 billion yuan, the bureau said.

Output of state firms rose a year-on-year 7.9 per cent in the month to 125.7 billion yuan while that of share-holding firms rose 9.8 per cent to 67.3 billion yuan, it said.

Output of foreign-funded firms rose 8.6 per cent year on year in August to 56.6 billion yuan, the bureau said. The growth rate fell by one percentage point from July.

source: indiatimes.com, September 12, 2001,