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Industrial output grows for 2nd straight month

Shanghai's industrial production grew in July for the second successive month year-on-year, reflecting a recovery in the city's economy after seven straight months of drops.

Shanghai's industrial output last month increased 2.1 percent from the same period last year to 198 billion yuan (US$28.9 billion), the Shanghai Statistics Bureau said today.

The rate grew 2.4 percent in June after drops of 2.1 percent in May and 5.2 percent in April.

"Industrial output growth is especially encouraging as the manufacturing sector is still the foundation of the economy and the rate is a key to measure the pace of an economic recovery,"said bureau analyst Wang Zehua.

"The result in July shows the stimulus package, along with a relatively easy monetary policy, has started to take effect and helped manufacturers overcome the difficulties during the global economic meltdown."

Shanghai's gross domestic product in the first six months increased an annualized 5.6 percent from the same period last year, rebounding from a record low of 3.1 percent in the first quarter.

The Shanghai government hopes to achieve 9 percent growth for the whole year and Mayor Han Zheng said last month he was confident the city would achieve the goal.

"The falling export growth still poses a negative influence over the city's industrial sector, but it has been countered by the buoyant domestic demand,"said Li Maoyu, an analyst at Changjiang Securities Co.

Shanghai's exports fell 22.3 percent year on year in the first half, but the decrease has moderated to 14.8 percent in July, according to Shanghai Customs.

The city's six key industries - electronics, vehicles, fine steel, petrochemical processing, machinery equipment and biomedicine - produced a combined output of 128.6 billion yuan last month, up 7.9 percent from a year earlier.

The production of vehicles jumped 71.5 percent to 22.1 billion yuan, thanks to increasing demand helped by government subsidies to new car buyers.

The petrochemical processing was the only sector among the six that reported a decline. Its output fell 6.9 percent to 21.8 billion yuan. For the first seven months, the city's industrial output dropped 4.6 percent from a year earlier to 1.25 trillion yuan.

The National Bureau of Statistics is set to release China's key economic data tomorrow.


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