Industrial output rises 17.7%
By Xu Dashan (China Daily)
Updated: 2004-04-10 08:39

The year-on-year increase was mainly driven by six major sectors - including electronics, metals and transportation equipment, said the bureau.

And in a sign that economic growth momentum is gathering pace, industrial output shot up by 19.4 per cent to 426.5 billion yuan (US$51.4 billion) in March, the bureau said.

The electronics sector contributed 2.2 percentage points to the industrial growth, while metals contributed 1.9 percentage points, said the bureau, although it did not reveal how much the other sectors contributed to overall industrial growth.

There were three major reasons for this growth, explained bureau spokesman Yao Jingyuan - fast fixed asset investment, stable growth in domestic consumption and fast industrial exports.

Production of different types of steel grew by as much as 29.5 per cent in the first quarter of 2004.

Cement production increased by 23.8 per cent, while flat glass production rose 20 per cent.

Car production grew 36.9 per cent, while mobile phone handset output increased by 42.1 per cent.

Exports handled by industrial firms grew 30.5 per cent to 699.1 billion yuan (US$84.2 billion) in this period.

Industrial output is an important contributor to gross domestic product.

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

Rapid industrial output since last year has raised concerns among economists and policymakers, who worried that sectors such as steel and cement are attracting too much investment, which could lead to overcapacity, hit corporate profits and trigger deflation.

Fan Gang, director of the National Economic Research Institute, said an overheating of some industries including cars, steel, aluminum and cement sectors could have a serious impact on the economy.

"If it is not cooled, the investment fever in some industries will heavily affect China's robust economic growth," Fan said.

Excessive growth in some sectors is putting a strain on transportation and power suppliers, driving up the prices of raw materials and damaging industries across the country, he said.

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

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

The investment was also unlikely to fall, as private sector is playing an increasingly important role, he said.

External demand will be strong due to the global economic recovery, 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 at State Council's Development Research Centre, agreed that production will continue to grow at a higher rate over the next few months.

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

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