Slow demand curbs output
China's industrial output growth, year-on-year, slowed to 11 per cent in the first quarter under the weight of inventories and slack domestic demand, official figures show.
However, economists expected the pace of growth - lower than the 13.6 per cent in the same period last year - to pick up. The output value in the first three months was 452.5 billion yuan (about HK$421.72 billion).
The State Statistical Bureau yesterday said industrial output rose 13.5 per cent last month after growing 10.4 per cent in the previous two months.
The first quarter's slowdown in output partly was the result of soaring inventories in the past two years, NatWest Markets senior regional economist Charles Li said. He said the problem had forced many manufacturers to slash production to reduce inventories.
'There was a strong build-up in inventories in the past two years at an annual rate of 30 per cent, ' Mr Li said.
A poll conducted last year by the statistics bureau revealed many industrial enterprises operated well below their capacities, he said. Mr Li and other economists said slack domestic demand also checked output growth, particularly in collectively-owned enterprises.
In the first quarter, collectively-owned industry showed output growth of 12.1 per cent, with output of rural township enterprises up 13.5 per cent, according to the bureau. That represented a sharp slowdown compared with the year-ago period, it said.
Output growth of foreign-funded enterprises and private enterprises also appeared to have slowed to 14.7 per cent.
Mr Li said production would pick up gradually as mainland manufacturers reduced their inventories. He said the strong export momentum would help offset slack domestic demand.
State-owned industry was also recovering gradually, he said.
In the first quarter, wholly owned state firms and those in which the state has a majority stakes showed output value growth of 6.8 per cent. State firms alone increased 5.1 per cent. The sales-output ratio of industrial manufacturers also picked up by 0.85 percentage points to 93.96 per cent, with the ratio rising to 95.02 per cent last month.