Mainland curbs slow output growth to 18pc

PUBLISHED : Thursday, 16 August, 2007, 12:00am
UPDATED : Thursday, 16 August, 2007, 12:00am

Mainland industrial production grew at a slower rate last month as export curbs put the brakes on some factory output, but it was not enough to ease calls for more monetary tightening.

Production expanded 18 per cent year on year from 19.4 per cent in June, according to the National Bureau of Statistics.

Economists said the figure for last month was slightly higher than earlier this year and unlikely to prevent further measures to cool runaway expansion, when put alongside accelerated export growth and decade-high consumer inflation for the month.

Huang Yiping, the chief mainland economist with Citigroup, said the annual growth rate was still higher than the 16 to 17 per cent posted since 2002.

Between January and last month, mainland industrial output rose 18.5 per cent, exceeding the 17.6 per cent gain in the same period last year, the bureau said on its website yesterday.

It rose 17.6 per cent in March and 17.4 per cent in April, then accelerated to 18.1 per cent in May.

Output rose 16.6 per cent last year, 16.4 per cent in 2005, 16.7 per cent in 2004 and 17 per cent in 2003, propelled by a boom in investment, much of it linked to exports.

Moderating growth last month might have resulted from firms shipping abroad goods before cuts in export-tax rebates.

The mainland ended or cut tax rebates from July 1 on almost 3,000 export products to reduce its trade surplus and discourage production of low-value, energy-intensive goods.

'We continue to expect further tightening of monetary policies and implementation of other measures to slow growth momentum,' Mr Huang said.

Jing Ulrich, the chairman of China equities at JP Morgan Securities, said the data for last month still suggested strong demand for mainland goods.

'It is pretty evident demand for China's manufactured goods remains strong - just look at the recent export sales numbers, as well as retail sales within China,' Mrs Ulrich said.

The trade surplus hit US$24.36 billion last month, the second-highest after June's record US$26.9 billion.