Production data indicates stabilization for Shanghai
By Wang Yanlin |
August 16, 2012, Thursday
|
Print Edition
Print Edition
THE contraction in Shanghai's industrial production narrowed in July, indicating the possible advent of economic stabilization in the city despite a disappointing performance nationwide.
Industrial production declined 0.9 percent from a year earlier to 264.1 billion yuan (US$41.9 billion) last month, compared to a cut of 3.5 percent in June, the Shanghai Statistics Bureau said yesterday.
Weak external demand was still the main drag for manufacturing, as exported industrial output slumped 7.5 percent year on year to 69.6 billion yuan.
The city's six pillar industries of manufacturing - information technology, automobiles, petroleum, refined steel, machinery equipment and biomedicine - reported a contraction of 0.5 percent to 174.5 billion yuan in July, better than the average industries.
"Manufacturing remains an important part of Shanghai's economy, and the improvement in industrial output is a signal of possible economic stabilization," said Li Maoyu, an analyst with Changjiang Securities Co.
"The easing inflation is another positive factor for the city to secure recovery," Li added.
The Consumer Price Index, the main gauge of inflation, expanded 2.1 percent on an annual basis in July, moderating further from the increase of 2.4 percent a month earlier.
Food costs, which account for a third of the total basket, rose 4 percent year on year, compared with June's gain of 4.7 percent.
Yan Jun, chief economist at the bureau, said Shanghai's economy was stabilizing with a strong service sector and an improving manufacturing sector.
In the first half, output of Shanghai's service sector jumped 10.3 percent from a year earlier, powering the city to deliver a gross domestic product growth of 7.2 percent in the first six months.
The second-quarter GDP growth in Shanghai sat at 7.3 percent, up from the 7 percent rise in the first three months.
Although Shanghai remained among the worst performers in China's provinces and municipalities, it took the lead in rendering an acceleration in economic growth.
"Shanghai will continue to push forward economic restructuring, and the city is expected to fulfill the economic target of around 8 percent this year," Yan said.
Sagging trade was the biggest hurdle.
In July, Shanghai's exports slumped 9.9 percent from a year earlier to US$18.2 billion, the deepest monthly drop since November 2009. Imports rose 4.2 percent to US$20.1 billion, landing July's trade at US$38.4 billion, down 3 percent from a year earlier, the bureau's data showed.
"Shanghai may need some additional supportive policies for traders if the city's exports continue to suffer like this," said Xue Jun, an analyst at CITIC Securities Co.
China's exports still expanded 1 percent from a year earlier last month, although the growth was a seven-month low.
The country's other economic indicators for July, such as industrial production, retail sales and fixed-asset investment, all turned out to be worse than expected, triggering economists' calls for measures such as an immediate cut in the reserve requirement ratio to curb capital outflow and spur growth.
China cut interest rates twice in the past two months after its gross domestic product rose 7.6 percent in the second quarter, the slowest pace in three years.
Industrial production declined 0.9 percent from a year earlier to 264.1 billion yuan (US$41.9 billion) last month, compared to a cut of 3.5 percent in June, the Shanghai Statistics Bureau said yesterday.
Weak external demand was still the main drag for manufacturing, as exported industrial output slumped 7.5 percent year on year to 69.6 billion yuan.
The city's six pillar industries of manufacturing - information technology, automobiles, petroleum, refined steel, machinery equipment and biomedicine - reported a contraction of 0.5 percent to 174.5 billion yuan in July, better than the average industries.
"Manufacturing remains an important part of Shanghai's economy, and the improvement in industrial output is a signal of possible economic stabilization," said Li Maoyu, an analyst with Changjiang Securities Co.
"The easing inflation is another positive factor for the city to secure recovery," Li added.
The Consumer Price Index, the main gauge of inflation, expanded 2.1 percent on an annual basis in July, moderating further from the increase of 2.4 percent a month earlier.
Food costs, which account for a third of the total basket, rose 4 percent year on year, compared with June's gain of 4.7 percent.
Yan Jun, chief economist at the bureau, said Shanghai's economy was stabilizing with a strong service sector and an improving manufacturing sector.
In the first half, output of Shanghai's service sector jumped 10.3 percent from a year earlier, powering the city to deliver a gross domestic product growth of 7.2 percent in the first six months.
The second-quarter GDP growth in Shanghai sat at 7.3 percent, up from the 7 percent rise in the first three months.
Although Shanghai remained among the worst performers in China's provinces and municipalities, it took the lead in rendering an acceleration in economic growth.
"Shanghai will continue to push forward economic restructuring, and the city is expected to fulfill the economic target of around 8 percent this year," Yan said.
Sagging trade was the biggest hurdle.
In July, Shanghai's exports slumped 9.9 percent from a year earlier to US$18.2 billion, the deepest monthly drop since November 2009. Imports rose 4.2 percent to US$20.1 billion, landing July's trade at US$38.4 billion, down 3 percent from a year earlier, the bureau's data showed.
"Shanghai may need some additional supportive policies for traders if the city's exports continue to suffer like this," said Xue Jun, an analyst at CITIC Securities Co.
China's exports still expanded 1 percent from a year earlier last month, although the growth was a seven-month low.
The country's other economic indicators for July, such as industrial production, retail sales and fixed-asset investment, all turned out to be worse than expected, triggering economists' calls for measures such as an immediate cut in the reserve requirement ratio to curb capital outflow and spur growth.
China cut interest rates twice in the past two months after its gross domestic product rose 7.6 percent in the second quarter, the slowest pace in three years.
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