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June 18, 2018

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Physical indicators give glimpse of positive changes in economy

WHILE China’s May economic data suggested overall economic resilience, a glimpse into the physical indicators may provide more details of the changes taking place in the economic picture.

Growth in energy consumption, freight traffic, and producer prices all picked up last month. China’s industrial electricity use increased 10.8 percent from a year ago, picking up from the April level of 7.3 percent, according to the National Bureau of Statistics. “This reflects stronger industrial production activities,” said Wen Jianwu, head of NBS’s department of industrial statistics.

Meanwhile, freight volume increased 8.5 percent year on year last month. Railway freight in particular jumped 11.8 percent, 10.4 percent higher than the growth in April. Last month also saw stronger demand for industrial products, which pushed up the producer price index, a measure of industrial product inflation, by 4.1 percent year on year, the highest growth in four months.

At Sany Heavy Industry Co Ltd, a heavy machinery manufacturer, the working hours of heavy equipment including mixing stations, pumping trucks, and hoisting equipment was on the rise. In the first five months of this year, Sany’s cranes worked 13.9 percent longer compared with the same period in 2017 as expansion in manufacturing investment has kept machines busy.

This was in line with official investment figures. NBS data showed that fixed-asset investment in manufacturing climbed 5.2 percent in the first five months, up from 4.8 percent for January-April.

Continued expansion in manufacturing investment provides evidence of China’s restructuring progress. Amid efforts to drive innovation, the output of China’s high-tech and equipment manufacturing sectors substantially outpaced last month’s industrial average, with production of new energy vehicles, integrated circuits, and robots up 56.7 percent, 17.2 percent, and 35.1 percent, respectively.

For the service sector, China’s Index of Services Production went up 8.1 percent last month, with modern emerging service industries such as the Internet contributing up to 56.8 percent to the service sector growth, according to the NBS. In another sign of booming new businesses, electricity consumed by the software and information technology industry jumped 66.05 percent year on year in the January-May period, while that of the Internet service industry rose 63.26 percent.

NBS spokesperson Mao Shengyong said at a press conference earlier last week that the supply side structural reform had prompted robust emerging sectors and sustained growth in the broader economy.


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