Industrial output rises with decline in efficiency
CHINA'S industrial added-value output last month rebounded to show a growth of 12.9 per cent over October last year, according to the State Statistical Bureau.
The rise was 1.5 percentage points higher than that of September with the industrial added value totalling 151.3 billion yuan (about HK$140.56 billion), fuelled by bank loans to the sector, Xinhua (the New China News Agency) quoted the bureau as saying.
China's industrial economic efficiency has been declining this year, with the composite efficiency index falling 4.21 points from a year earlier to stand at 88.14 last month.
The bureau said the index for the state sector was even lower but it did not reveal the figure.
It warned of the urgency to improve the quality of industrial growth particularly at a time when debt and stockpiles were on the rise.
'The growth rate was more a negative than a positive sign,' said Merrill Lynch senior economist (Asia Pacific) Nicholas Kwan.
The mild pick-up, coupled with a falling economic efficiency, meant there was a continuing trend of the industrial sector growing at low efficiency.
'It would be a warning signal if the industrial output continues an upward trend to 15 to 18 per cent while the composite efficiency index is declining,' Mr Kwan said.
'The question is not whether the growth is rapid or slow. What matters is whether there is efficiency.
'If the industrial sector is operating efficiently, it is not a problem even when there is slower growth in industrial output value.' Mr Kwan said it was better to have fewer but marketable and usable products than more products to be left stockpiled.
Benny Chiu, research manager of Hongkong Bank China Services, said there was no cause for worry because one month's figure did not establish a trend.
'I think it's more a fluctuation rather than a trend. I don't expect a strong rebound in industrial output,' he said.
On the whole, the austerity programme would continue to put a brake on investments in the sector, he said.
The industrial added value in the state sector grew 8.7 per cent last month, the collectively-owned sector 14.1 per cent, and businesses, including foreign-funded and private firms, 18.4 per cent.
For the first 10 months of the year, the national industrial added value stood at 1.43 trillion yuan, up 13.3 per cent from the same period last year.
The energy industry produced 102 million tons of coal last month, up 6.5 per cent from October last year.
Mr Kwan said it might reflect the acceleration of production after the floods in the northeast hit oil fields.
Production of most light industrial and textile products continued at a fast pace last month.
Growth of iron and steel eased and the output of most raw materials fell slightly.
Industrial sales gathered pace, rising 20.7 per cent during the month. This compared with a 20.2 per cent increase in September.
Total industrial sales were 543.9 billion yuan last month.