China's industrial output sees 7.2% growth in January

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Last updated at: (Beijing Time) Friday, February 13, 2004

China's industrial output sees 7.2% growth in January

China's industrial output grew 7.2 per cent in January compared with a year ago to 334.4 billion yuan (US$40.3 billion), the National Bureau of Statistics said on February 12.

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China's industrial output grew 7.2 per cent in January compared with a year ago to 334.4 billion yuan (US$40.3 billion), the National Bureau of Statistics said on February 12.

After adjusting for distortions from the Chinese New Year holiday, the month's industrial output grew a year-on-year 19.1 per cent, the fastest rate since February 2003, when output grew 19.8 per cent.

Output by the heavy industry sector grew 9.1 per cent to 222.7 billion yuan (US$26.8 billion), while output by the light industry sector rose 4.9 per cent to 111.7 billion yuan (US$13.5 billion), the bureau said.

Last year, China's industrial output grew 17 per cent, and the country's gross domestic product grew 9.1 per cent.

The fast industrial output since last year increased worries for Chinese policy-makers who thought sectors, such as steel and cement, were drawing too much investment, which could lead to overcapacity, hit corporate profits and trigger deflation.

This week Premier Wen Jiabao ordered a clampdown on excessive lending in hopes of reining in the over-investment that could undermine economic growth and complicate reforms in State banks and companies.

But Niu Li, a senior economist with the State Information Centre, said the country's production lines would unlikely cool down in the coming months as China's economy has entered a new development period.

"Pillar industries such as housing and car manufacturing will continue to develop at a rapid speed as more affluent people begin to consume these products," he said.

Investment will also unlikely drop because private investment has become more active, he said.

As the world economy turns for the better, external demand will be strong, he said.

Driven by the country's fast industrial growth, the country's economy is likely to grow 8.5 per cent this year.

Wang Zhao, a researcher with the State Council's Development Research Centre, agreed that production will continue to grow at a higher rate in the coming months.

The Chinese economy will also continue to develop at a high speed as market forces have begun to play a leading role in economic development.

David Robinson, deputy director of the Research Department of the International Monetary Fund, said China's economic growth has changed the old global industrial structure map.

More foreign companies have chosen to establish ventures in China, more foreign investment has rushed to China and more lower-priced industrial products made in China have entered the world market, he said.

Qiu Xiaohua, deputy commissioner of the National Bureau of Statistics, said he was confident that the Chinese economy would grow at a higher rate in the coming decade.

"Market forces have begun to add fuel to the government-lead economy," Qiu said.

Along with the deepening of the reform, market vitality will become stronger, he said.

The micro-economic base for current economic development has also been improving as entrepreneurs and consumers have shown increasing confidence in the future, he said.

New growth areas in the economy have resulted from the continuing structural adjustments, Qiu said.

The formation of the Pearl River Delta, Yangtze River Delta and Bohai economic zones, the reviving of the old industrial base in Northeast China, and the further development of the high-tech industry and service sector will all inject new vigor into future economic development, he said.

The implementation of the western development strategy, the deepening of the reform on State-owned companies and the rapid development of non-State economies will further fuel the economy, Qiu said.

Qiu admitted, however, that the country's economy remains plagued by problems and that measures are needed following rapid lending and credit growth.

"The difficulty in raising rural incomes, which has plagued the economy for a long time, the relatively large unemployment pressure and other contradictions are still prominent," he said.

Unbalanced development between investment and consumption, urban and rural areas, and industrial output and energy has become more pronounced, Qiu said.

Still, Zhang Liqun, a senior researcher with the Development Research Centre, said a higher growth rate for the economy in the coming decades is achievable.

"No one can underestimate the country's solid development foundation formed by the reform and opening, the comprehensive effects brought in by the country's efforts to expand domestic demand and the central government's ability to control the overall economy," he said.

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