Industrial Production News
- Investment, exports promote industrial growth
Date: 18-Jun-2007 Sources: (Xinhua Online)
BEIJING, June 15 -- China's industrial production grew faster in May, thanks to higher investments and exports, adding further pressure on the central bank to raise interest rates to cool down the economy.
Industrial production, measured by value aded industry, surge 18.1 percent year-on-year last month after gaining 17.4 percent a month ago, and beating the market forecast of 17 percent.
Among the fast growing industries were transport equipment, non-metallic mineral products, smelted and pressed ferrous metals, and electrical machinery and equipment, according to National Bureau of Statistics figures released yesterday.
It was the fastest growth since late last year when industrial production grew just below 15 percent, and was fuelled mainly by 'fast-paced investment, especially fixed-asset investment, and red-hot exports,' said CITIC Securities analyst Chen Jijun.
In the first four months of this year, urban fixed asset investment rose 25.5 percent year-on-year, and real estate investment, as its major part, jumped 28.2 percent. It pushed up the market demand for construction-related steel products, cement and non-ferrous metals.
The increase in the prices of these products, in turn, drove up production material prices by 4.8 percent year-on-year in January-April, according to National Development and Reform Commission figures released on Wednesday.
Merchandise exports rose 30 percent year-on-year in the first four months against just a 19 percent growth in imports, the World Bank said in its latest report. And exports of steel products doubled in the first five months from a year ago period.
'The fast industrial production growth will stimulate China's already robust gross domestic product (GDP) because industrial output is the biggest contributor to the GDP,' said Qi Xinmei, an economist with the State Information Center.
'It also creates difficulties for national energy-saving and environmental protection efforts of the central government because iron and steel, as well as petrochemicals, contributed a lot to industrial output growth,' added Qi.
To cool down the economy, China will implement a 'modest tightening' monetary policy, Premier Wen Jiabao said at a cabinet meeting on Wednesday.
He said industrial production is growing at a rate that is faster than desired and the trade surplus is too big.
China's trade surplus in May soared to $22.45 billion, up 73 percent over the same month last year.
Wen said the country would continue to adjust export rebates and tariffs on certain items while further improving policies to boost imports in a bid to address the climbing trade surplus.
The much expected interest rate hike as a tightening measure 'could come as early as this month if the investment data that will be released tomorrow turns out to be a big surprise,' said a note from Citibank (China), which had earlier forecast investment would accelerate to 26 percent in May.
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