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China industrial growth heralds broader recovery

BEIJING: China's industrial output charged ahead in February, heralding a steady economic recovery this year as deflation eases, analysts said on Thursday.

Value-added industrial output grew 12 percent year-on-year in February to 148.7 billion yuan ($17.96 billion), according to data released by the State Statistical Bureau.

The growth rate was nine percent if the month's extra leap year day was deducted, the bureau said without elaboration.

"Industrial output maintained relatively rapid growth," it said in a statement.

Industrial output rose 10.4 percent year-on-year in the first two months of 2000 to 313 billion yuan, it said.

"This showed both external and internal demand are picking up," said Wu Jianzhong, a senior economist at the China Economic Monitoring Centre, a government think-tank.

"The economic prospects for 2000 are better than that of 1999," he said. "And deflation is easing."

THE WOREST MAY BE OVER

The government has pledged to sustain deficit spending this year by issuing another 100 billion yuan in long-term bonds to keep the economy on track to seven percent growth.

Economists generally forecast this year's growth rate would be higher than 7.1 percent registered last year.

Reflecting strong overseas demand, industrial firms exported goods worth 80.7 billion yuan in February, up 31.5 percent year on year, the statistics bureau said.

"I think the expansionary policies have been underpinning the manufacturing sector," said Sheng Hong, an economist at the Beijing Unirule Institute of Economics, an independent research body.

"The worst of deflation is probably over," he said.

Industrial output, which excludes the cost of raw materials, was up an annual 8.5 percent last year, earlier official figures showed.

But Zhang Feng, an economist at the State Information Centre, said industrial growth may slow later this year.

"It's still hard to predict the trends in the coming months, although people generally think the prospects are brighter this year," he said.

HEAVY INDUSTRIES LEAD GROWTH

The output of heavy industries rose a year-on-year 12.4 percent in February to 87 billion yuan, the bureau said.

The growth rate was 0.8 percentage point higher than that of light industries, it said without elaboration.

State-owned firms and companies in which the state holds a majority stake generated output of 90.5 billion yuan in February, up 10.3 percent year-on-year, it said.

The output of collectives rose 8.4 percent to 20 billion yuan while that of foreign-invested firms surged 14.9 percent to 31.4 billion yuan, it said.-Reuters