China forecasts pickup in industrial production
Senior officialtips a fourth-quarter rebound in the mainland's industrial production but big hurdles still ahead for the country's economy
Industrial output will likely grow quicker this quarter, laying solid ground for Beijing to realise its target of 7.5 per cent economic growth this year.
The forecast yesterday by Ministry of Industry and Information Technology spokesman Zhu Hongren was in line with economists' expectations for economic growth to rebound in the fourth quarter, after slowing for seven consecutive quarters. But he said China still faced problems, including rising business costs and weak external demand.
"Industrial operations have come to a crucial point of bottoming out and stabilising, while positive factors are accumulating," Zhu said. Fourth-quarter output growth might accelerate from the third quarter, he said.
Greater confidence by investors in the mainland's economic prospects helped push the yuan to 6.2419 to the US dollar in Shanghai yesterday, the highest rate since late 1993.
Mizuho Securities said the yuan's strength was partly helped by the US Federal Reserve's third round of quantitative easing last month, which sent capital flowing into emerging markets, including China.
Value-added industrial production grew 9.1 per cent in the third quarter from a year earlier, slower than the 9.5 per cent growth in the second quarter and the 11.6 per cent gain in the first. But, output growth sped up month to month from July to September, official data showed.
The preliminary HSBC manufacturing purchasing managers index for the mainland also signalled that a recovery could be in sight. The gauge climbed to 49.1 in October from 47.9 in September, reflecting a slower rate of contraction.
Zhu said industrial output growth picked up in central and western China in September from August, while growth in the country's more developed east slowed less sharply.
But excess capacity in some industries such as steel, cement, and glass persisted amid weak demand, Zhu said. He cited data as showing that less than 75 per cent of the country's steel capacity and 72 per cent of its cement was being used. And, corporate profitability kept falling, as growth in companies' costs outpaced rises in revenue, he said.
The present growth slowdown "will be more gradual and last longer" than the last downturn during the 2008-2009 global financial crisis, Zhu said.
Industrial output growth fell from 16 per cent in June 2008, to 3.8 per cent in early 2009 before rebounding to 18.5 per cent in December 2009 with the help of Beijing's four trillion yuan economic stimulus package.
Zhu also said "great difficulties" lay in export growth as external demand remained weak.
Li Yushi, from the Chinese Academy of International Trade and Economic Co-operation, said exports might grow 6-7 per cent this year and the expansion might stay below 10 per cent next year, according to a Reuters report. He forecast China would record another big trade surplus this year due to weak imports.
China had a US$148 billion trade surplus in the first nine months of this year. The 2011 surplus was US$155 billion.