Tight control drags down growth pace


Updated Thu, 12 Aug 2004 00:00:00 GMT

Growth in China's industrial output slowed down in July thanks to the central government's measures to cool the economy.

The country's industrial output rose 15.5 per cent in July compared with the same month of last year, but the growth rate was 0.7 percentage points lower than the previous month, according to a statement issue Tuseday by the National Bureau of Statistics.

    In June, growth slowed 1.3 percentage points compared with May, earlier figures indicated. For the first seven months, output rose 17.3 per cent from the same period of last year.

    Economist Zhang Xueying at the State Information Centre said the slower rate suggests the central government's macro-control measures have taken effect.

    China has taken a raft of measures since the second half of last year to try to cool down the economy. They include raising bank reserve requirements three times and curbing unwanted fixed asset investment projects.

    "These measures have had a great impact on fixed asset investment and industrial output," he said.

    Zhu Jianfang, an economist at China Securities, agreed the high industrial growth since last year has been dragged down.

    "Industrial growth in July was not high at all," he said.

    Zhang actually expressed fears for a fast decline in industrial output growth and fixed asset investment.

    The government wants to bring economic growth down from current levels, where many resources, such as oil, have been constrained, but he said it must stay above 7 per cent to keep people in work.

    "We need to prevent such a downward trend from speeding up in the coming months," Zhang said.

    Growth in the output of aluminium, a sector targeted by the government in its drive to reduce investment, slowed to 10.8 per cent in July from 16.2 per cent in June, the statistics bureau said.

    Cement production growth fell to 11 per cent from 13.2 per cent, and cars to 5.4 per cent from 20.4 per cent.

    Industrial output is an important indicator for gross domestic product. China's industrial output grew by 17 per cent last year, and its gross domestic product grew by 9.1 per cent.

    During the first half of this year, industrial output grew year-on-year 17.7 per cent and the country's gross domestic product rose 9.7 per cent.  

    The national economy kept stable with fast growth, while economic efficiency was improved continuously, relative people said.

    Uncertainties and unhealthy factors in economic performance have also been placed under initial control, he said.

    But the government should be aware at the same time that those prominent problems existing in the economy have not been rooted out fundamentally, he said.

    Energy and transport bottlenecks and rapid growth in fixed asset investments in some sectors are still troubling, he said.