Chinese Indu. Production Explodes to the Upside.
Oh man! (and yes I like you're range of 3.90 to 4.20 with 20 beeps on either side--for all the reasons you mention)
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China's March Industrial Production Grows 19.4% (Update3)
April 9 (Bloomberg) -- China's industrial production growth accelerated in March, suggesting the government may need further measures to cool Asia's second-largest economy.
Factory production grew 19.4 percent to 426.5 billion yuan ($51.5 billion) after rising 17 percent in the first two months of the year, Beijing-based Mainland Marketing Research Co. (China), which releases data on behalf of the National Bureau of Statistics, said in a faxed statement.
China's government is trying to slow investment in steel, cement, aluminum and other industries because of concern that capacity may outstrip demand, causing prices to fall and driving up bad loans at the nation's banks. The central bank raised some interest rates for loans to banks two weeks ago and said further measures may be needed to slow credit growth.
``China's measures to cool the economy aren't working very well,'' said Andy Xie, chief economist at Morgan Stanley Asia Ltd. in Hong Kong. ``Local governments are working against the central government by setting up many new projects. If China doesn't take more effective measures, a hard landing will be inevitable.''
Investment expansion was the main driver of production growth in the first quarter, Mainland Marketing said in the statement. Steel production rose 29.5 percent in the first three months from a year ago, while that of cement manufacturing equipment jumped 59 percent during the period.
Industrial production grew 17.7 percent to 1.13 trillion yuan in the first quarter, Mainland Marketing said.
Surging Demand
Jiangsu Shagang Group, a private steel maker, will invest a total of 12 billion yuan by 2005. The company will build a 2 million ton hot rolling steel project, a 600,000 ton-stainless steel production line, and will also expand a port and build other infrastructure projects, according to the company's web site.
Industrial production is growing as factories expand to meet surging local demand for televisions, cell phones and cars. Disposable incomes in China's towns and cities last year topped $1,000 per person for the first time and retail sales in January had their biggest gain in three years. China's economy grew 9.9 percent in the three months ended Dec. 31 from a year earlier.
China's attempts to curb investment in industries such as steel and cement are being thwarted by local governments spending on unnecessary and wasteful projects, the country's top planning agency said last month.
Interest Rates
Fixed-asset investment by local governments surged 65 percent in the first two months from a year earlier, more than five times as fast as the increase in central government spending.
The central bank last month raised the rediscount rate at which it lends for up to 60 days by 0.27 percentage point to 3.24 percent. It left its one-year lending rate, previously the bank's main tool for monetary policy, at 5.31 percent. Commercial banks aren't allowed to charge more than 1.7 times that rate.
The bank later said it ``will continue to tweak policy'' to slow credit growth.
To contact the reporter on this story:
Tian Ying in Beijing at ytian@bloomberg.net
To contact the editors for this story:
Chris Wellisz at cwellisz@bloomberg.net |
