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August 28, 2009

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Output to grow 11.5% in Q3

CHINA'S industrial production may accelerate faster thanks to the government's stimulus policy to grow 11.5 percent year on year in the third quarter, said a report by the Ministry of Industry and Information Technology and the Chinese Academy of Social Sciences.

However, weak external demand, lethargic private investment, excessive production capacity and falling producer prices are major challenges that China has to deal with, said the report released on Wednesday.

It predicted industrial production may expand 11 percent to 12 percent for the whole year, almost meeting the growth of 12.9 percent in 2008.

China's industrial output grew 7.5 percent from a year earlier in the first seven months. In July alone, the output rose 10.8 percent, according to the National Bureau of Statistics.

"It is high time for China's manufacturing sector to recover from the blow of the global economic meltdown. Despite many difficulties and challenges, the performance of Chinese factories has stabilized with a trend to rebound," said the report.

The report was more optimistic than the one made by the State Information Center, a research unit under the National Development and Reform Commission, which said last week that China's industrial production may gain 10.8 percent in the third quarter.

One of the signs that China's manufacturing industry was starting to recover was the shortage of migrant workers in the coastal cities in Guangdong Province, according to media reports.

But the challenges are still around and can't be ignored.

On Wednesday, the State Council, China's Cabinet, said it would try to curb overcapacity and excessive investment in industries including steel and cement.

To make the growth sustainable, the report suggested adjusting the industrial structure and eliminating wasteful projects.

"The country should attach importance to the quality of industrial growth, not the figure of growth. The structure adjustment may trigger a slower pace of expansion in the short term, but it will do good to the economy in the long run," the report said.


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