Economic Trend News
- Exports fuel rapid rise in China's production
Date: 16-Mar-2007 Sources: (Xinhua Online)
Strong exports fueled the rapid growth in China's industrial production in the past two months, the National Bureau of Statistics said Thursday, but the rise raised prospects the central bank may tighten monetary policy to stave off overheating risks.
Production jumped 18.5 percent through February, after rising 14.7 percent in December, the bureau said. The growth over two months, combined to eliminate distortions due to Chinese New Year which occurred in January last year and in February this year, is the strongest since June.
Analysts said the robust growth in the output showed signs that the economy has rebounded from the policy-induced slowdown since the third quarter of last year.
'Strong exports were likely an important driver behind the acceleration in industrial production growth,' said Liang Hong, an economist at Goldman Sachs Asia Economics Research Group. 'If economic activity and loan provision growth continues to accelerate, we believe the risks for policy tightening will rise.'
The jump in the output came on the heels of a faster inflation, a ballooning trade surplus and rising lending.
China's consumer price index grew 2.7 percent year on year in February, up from a 2.2 percent increase in January. The trade gap widened to 23.8 billion U.S. dollars last month - a significant increase from the 15.9 billion U.S. dollars in January. Meanwhile, new loans extended by commercial banks totalled 413.8 billion yuan (53.4 billion U.S. dollars) last month, up 264.7 billion yuan from a year earlier.
The People's Bank of China, the central bank, has already raised borrowing costs twice and since last year has asked banks on five occasions to set aside more reserves to curb the excessive liquidity and rein in investment.
Data on urban fixed-asset spending, another major barometer of the economy, will be released today by the bureau. Growth hit 24.5 percent in 2006.
In Thursday's report, vehicle production climbed 21.5 percent in the first two months, with car output expanding 29 percent. Steel production jumped 25.4 percent.
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