China's Factory Production up 16% in May

June 16, 2008
The rate is slower than the 18.1% in May 2007.

China's industrial output showed signs of slowing down in May, suggesting the Asian giant is hurting from weakening demand from abroad, the government and experts said June 16. Factory production in the world's fourth largest economy increased 16% last month from a year earlier, the National Bureau of Statistics said.

The figure was rather modest by Chinese standards, even though May had three more working days in 2008 than in 2007 following a reform of the holiday schedule, analysts said.

Industrial output had risen by 15.7% in April, but in May last year -- a more relevant comparison -- it had gone up by a significantly more robust 18.1%.

Xing Zhiqiang, an economist with China International Capital Corporation, said output was mainly affected by a slowing global economy, with the increase in the value of exports delivered by Chinese industrial producers easing to 18.2% in May from 19.9% in the same month last year. The Chinese government said earlier this month the trade surplus was likely to shrink in 2008 for the first time in five years on weakening exports mainly due to the rising local currency and the US economic slowdown.

But analysts said the appreciation of the Chinese yuan would continue this year at the current pace as it made imports cheaper and could thus help solve the country's growing problem with inflation. "The export slowdown was caused by weaker external demand, rises raw material prices and rising labour costs in China. It's hard to say it was simply led by the rise in the yuan," Xing said.

China's vehicle output reached 895,000 units in May, a rise of 21.7% from a year earlier, according to the statistics bureau. Of this number, 457,000 were sedans, a rise of 17.6% from the same month last year, the bureau said.

Copyright Agence France-Presse, 2008

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