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CHINA / National |
Industrial output rises 17.9% in October(Agencies)
Updated: 2007-11-15 17:03 China's industrial production grew 17.9 percent in October as automobile and electronics output accelerated, underscoring government concern that the world's fastest-growing major economy risks overheating. The increase was less than September's 18.9 percent, according to figures released by the statistics bureau Thursday, and compares with the 18.5 percent median estimate of 22 economists surveyed by Bloomberg News. The slowdown may be insufficient to deter the central bank from raising a one-year lending rate that's already climbed 1.17 percentage points this year to a nine-year high of 7.29 percent. Premier Wen Jiabao Wednesday pledged to tighten economic controls after inflation accelerated to the fastest in a decade and the trade surplus widened to a record. "Beijing knows that we are on the verge of overheating and interest rates need to rise very soon," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. The key rate compares with 4.5 percent in the US, 5.75 percent in the UK and 0.5 percent in Japan. China should raise interest rates and allow more currency appreciation, the World Bank said Thursday. Bigger yuan gains would staunch money inflows by pushing up export prices. The currency has climbed 11 percent versus the dollar since a fixed exchange rate ended in July 2007. Production growth was higher than the 14.7 percent gain a year earlier and the 16.6 percent expansion for all of 2006. Output rose 18.5 percent for the year through October. Automobiles, Computers Automobile output rose 24.3 percent in October from a year earlier. Computer, telecommunications and electronic equipment production climbed 18.9 percent. SAIC Motor Corp., China's largest carmaker, plans a 12 percent increase in production this year to 1.5 million vehicles, Chairman Hu Maoyuan said Oct. 16. China's economy, the world's fourth largest, expanded 11.5 percent in the third quarter from a year earlier. Inflation accelerated to 6.5 percent in October, matching August's rate. The monthly trade surplus was $27 billion. Spending on factories and property probably climbed 26.2 percent in the first 10 months, according to a Bloomberg News survey of economists. That figure, the last in this round of data, is due at 10 a.m. Friday. "Data released this week has shown increased risks of overheating and the central bank has little excuse not to raise interest rates," said Wang Tao, head of economics and strategy for Greater China at Bank of America Corp. in Beijing. Pollution, Energy China is trying to curb investment in industries that have overcapacity, consume too much energy and produce excessive pollution. The premier said last month that the government will limit land use, tighten investment-project approvals and guide bank lending. "Policy tightening" has cooled factory output, said Ben Simpfendorfer, a strategist at Royal Bank of Scotland Plc in Hong Kong. "It will moderate further in the early part of next year as exports slow on weaker global demand." While the trade surplus reached a record on Christmas shipments, the 22.3 percent gain in exports from a year earlier was the smallest increase in seven months. Retail sales in the US rose 0.2 percent in October from the previous month after gaining 0.7 percent in September, the Commerce Department said Wednesday. Export Demand Weaker growth in demand for exports "may be a factor behind the moderation in industrial production growth," said Liang Hong, senior economist at Goldman Sachs Group Inc in Hong Kong. Inflation leaves the government "with little choice but to tighten monetary policy further," she said. Besides rate increases, the People's Bank of China is boosting the proportion of deposits that lenders must set aside as reserves to 13.5 percent, the highest level since at least 1987. That's up from 9 percent at the start of the year. China's banking regulator met with the five biggest state- owned banks on Nov. 13, asking them to slow lending, the Shanghai Securities News reported. In India, the world's second-fastest growing major economy, industrial production grew 6.4 percent in September. |
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