-24 August 2007 -
China’s Industrial Production Rises By Double Digits in July; Government Seeks to Keep Growth in Check

China's industrial production rose 18% percent in July, according to information provided by the Statistics Bureau. This on the heels of an economic expansion of 11.9% in the second quarter, the fastest pace in 12 years.

Output growth in China—the world's largest maker of cell phones, clothes and home appliances—was almost double that of India, the world's second-fastest growing major economy, in June. Exports jumped 34.2 percent in July from a year earlier, the fastest pace in five months. Retail sales gained 16.4%, the biggest increase since May 2004 after adjusting for Lunar New Year distortions. “ China's economy is still accelerating,” said Amy Auster, senior economist at ANZ Banking Group in Melbourne.

For the first seven months, industrial production grew 18.5% from a year earlier. In 2006, China's industrial production grew 16.6%. In July, automobile output jumped 32.7%, and cement production rose 11.6%. Production of steel products climbed 23.9%.

Amidst this growth, the Chinese government wants to prevent cash from record trade surpluses from fueling inflation, stock and property speculation and factory spending, leading to overcapacity. The top economic priority for the second half of 2007 is to prevent "overheating,'' according to the central bank and the National Development and Reform Commission, the chief economic planning agency.

The government is also concerned by the environmental cost of being the world's manufacturing and assembly hub. The largely coal-powered economy is a major source of acid rain and other pollutants in Northeast Asia, and a significant contributor to “global-scale air pollution,” according to a report released last month by the Organization for Economic Cooperation and Development. About one-third of China's lakes, rivers and coastal waters are polluted because of farming and industry waste and pose a threat to human health, the OECD said. Premier Wen Jiabao said in March that the nation's growth is environmentally unsustainable.

Source: Bloomberg News