The power stations supplying the mainland's factories and smelters are humming louder in another sign a recovery in the world's third-biggest economy may be gaining strength. Mainland power output, a key barometer of economic activity, expanded 4.21 per cent year on year last month, the second consecutive month of growth registered this year. Across the broader economy, there are other so-called green shoots of recovery: manufacturing activity, retails sales and cargo are all up. 'We believe China's growth recovery can be sustained,' said UBS economist Wang Tao, who forecasts the economy will expand 8.2 per cent this year and 8.5 per cent next year. Power consumption, considered one of the most reliable measures of economic health because it reflects a broad scope of activity, is one of the brighter spots in the recovery story. National power output last month grew 4.21 per cent to 348.49 billion kilowatt-hours, the highest this year, Shanghai Securities News reported, quoting figures from the State Electrical Power Distribution Centre. That was higher than the 3.59 per cent growth seen in June, the first month of expansion after eight consecutive months of declines. Industrial activities contribute to more than 70 per cent of the mainland's power consumption. Other positive data is also being released. Manufacturing activity, measured by the purchasing managers' index, rose for the fifth month in July, and cargo throughput saw double-digit annual growth for the first time since September last year. Retail sales jumped an annualised 15 per cent to 5.87 trillion yuan (HK$6.66 trillion) in the first half amid government efforts to expand domestic consumption. Still, the recovery is not even across all sectors. One weak spot is exports, reflected by a 3.8 per cent year-on-year fall in container shipments at key ports, although the decline was the smallest this year. 'If you throw four trillion yuan into the economy, it is bound to grow. The question is whether it is sustainable,' said CIMB-GK Securities senior vice-president Pauline Loong. The geographical divergence in the recovery is shown in last month's power output figures. The light industrial and export hubs in the southern and eastern coastal provinces posted growth of 4.3 to 12.3 per cent, with the exception of Jiangsu and Shanghai where declines of less than 4 per cent were reported. The energy-intensive heavy industries heartland of the northern and western regions of Liaoning, Inner Mongolia, Guizhou, Gansu and Qinghai still saw power output declines of 0.8 to 7.4 per cent. Hebei and Henan provinces, however, both registered more than 10 per cent growth, thanks to a marked rebound in steel mill output. BOC International utilities analyst Peter Yao Sheng said the revival might be bumpy. 'We don't see a vigorous continuation of earlier momentum. The base for economic recovery may not be robust,' Mr Yao said, citing a 10.3 per cent power output fall in Shanghai and a 6.2 per cent fall in Jiangsu in the final 10 days of last month. Mr Wang also expected the impact of the government's stimulus package to wane next year, resulting in a slowdown in growth in the second and third quarters from a peak in this year's fourth quarter.
