Effort to rein in growth starts to pay dividends

PUBLISHED : Saturday, 10 July, 2004, 12:00am
UPDATED : Saturday, 10 July, 2004, 12:00am

Expansion in industrial output slows, and analysts expect trend to continue

The mainland's industrial output rose 16.2 per cent last month over the same month last year, but was slower than May's growth rate as government measures to cool overheated sectors of the economy started to have an impact, the State Statistical Bureau said yesterday.

Industrial output rose 17.5 per cent in May year on year. Output was 460.8 billion yuan in June.

'Industrial production growth slowed but didn't collapse last month, encouraging the policymakers to maintain the status quo of tightening policy in the coming months,' HSBC economist Qu Hongbin said in a report.

For the first half of the year, output rose 17.7 per cent year on year, the bureau said.

Production peaked in February, when there was a 23 per cent increase.

The rate of growth declined last month, compared with May, in sectors targeted by the government's policies to cool the economy, the bureau noted.

In the cement industry, for instance, industrial output rose 13.2 per cent in June, down from 17.1 per cent in May, while steel output rose 17.3 per cent, slowing from 20.6 per cent in May.

Heavy industrial production still rose 17.4 per cent year on year last month to about 309 billion yuan, while light industrial production rose a slower 15.3 per cent to 152 billion yuan.

Investment bank Goldman Sachs said the slowdown in industrial production had been expected, given the easing of investment in fixed assets.

'We expect the upcoming money, credit and investment indicators to show a further notable slowdown, owing to the tightening measures engineered since late April,' the bank said.

Meanwhile, Shanghai's gross domestic product roared ahead at 14.8 per cent annually in the first half of the year, despite central government moves to slow the nation's economy, a top city official was quoted yesterday as saying.

Shanghai is a major contributor to the mainland's economy, and the city's economic indicators typically outpace national figures.

The city's GDP reached 343 billion yuan in the first six months, the Youth Daily newspaper quoted Vice-Mayor Feng Guoqin as saying.

A Shanghai Statistical Bureau spokesman declined to confirm the figures, saying a formal announcement would be made later this month.

Economic growth in the first half was well above the local government's full-year target of 10 per cent. Shanghai's economy grew 11.8 per cent last year, and 13.5 per cent in the first quarter.

However, growth in the city's fixed-asset investments slowed in the second quarter from the first quarter because of central government policies to tighten credit. But the indicator still rose more than 26 per cent in the first five months, the report said.