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SCMP Reporter

Economists upbeat on August data but caution it is too early to say signs of growth point  to overheating

China's industrial output for August rose 15.9 per cent from a year earlier to 455 billion yuan, powered by robust exports and a surge in output from energy and IT industries, the National Bureau of Statistics said yesterday.

Last month's growth rate, inching up 0.4 percentage points from the previous month, reversed the downward trend in monthly industrial output since February, when it grew by 23 per cent.

But analysts cautioned against worries that the economy might be overheating again. 'The growth level in August still tracks well within the normal range,' said Cheng Manjiang , an economist with Bank of China International, a securities brokerage. 'There's no need to sweat it.'

The economic indicators for August, which started trickling out yesterday, have become a subject of great interest after the governor of the People's Bank of China, Zhou Xiaochuan , said this week that the central bank would  decide whether to raise interest rates for the first time in nine  years after looking at August's statistics.

The most watched data, the consumer price index and fixed-asset investment, will be released next week.

Observers said it is still too early to conclude  that the world's fastest-growing economy is poised to overheat  again, just as the central government is studying the impact of the current macroeconomic control measures to decide whether tighter or looser steps are needed.

'It does not look like a trend, and there should not be too much reading into this,' Ms Cheng said.

Zhang Xiaoji , an economist with the State Council's Development Research Centre,  said he read the increase in output as an indication of healthy economic growth.

'A possible hard landing is the primary concern for the authorities for the time being, and the August data should help to alleviate their worries,' Mr Zhang said.

'It's quite premature to conclude that cooling measures aren't working anymore just because of a small pickup in one month.'

The Ministry of Commerce announced yesterday that exports for the first eight months rose 35.8 per cent year on year to US$360.6 billion. August exports rose 37.7 per cent from a year earlier, up from nearly 34 per cent in July.

'The increase in output is driven by both domestic and external demands,' Ms Cheng said.

Imports rose 40.8 per cent year on year to US$361.5 billion. August imports were up 37.4 per cent.

Rising exports mostly stemmed from strong demand in overseas markets for China's hi-tech products, the report said. The export of technology-intensive products expanded at a robust rate of 57 per cent in the first eight months.

Last month, output of coal, oil and natural gas went up 17.2 per cent, 5.7 per cent and 22.6 per cent respectively after gaining 14.0 per cent, 4.4 per cent and 16.5 per cent in July, the official data showed.

Electricity output rose year on year by 12.1 per cent, up 0.4 percentage point on the year to July.

Production in the hi-tech sector shot up an average rate of 48 per cent in August, with growth in some areas reaching as high as 63 per cent.

The output of steel - one of the target sectors the central government has tried to rein in with tighter credit lending - shot up 22.9 per cent year on year, up 4.4 percentage points from July. But cement and aluminium production growth slowed, in line with the government's control policy.

Growth in car output continued its downward trend at a year-on-year rate of 3.6 per cent, down 1.8 percentage points from the previous month.

Premier Wen Jiabao  last month told banks to maintain their lending curbs to booming industries like steel, cement, aluminium and car manufacturing, saying the economy was still at a critical point.



Industrial output figure 'a good sign'