Although growth in China’s value-added industrial output and investment hit new low in August since this year, analysts thought that the data reflected the short-term influence of de-capacity and inspection on environmental protection on economy, and also showed that China’s economy is still witnessing stable and growing performance now.
Growth in production of high-energy-consumption manufacturing industry fell in August, but that of high-tech industry and equipment manufacturing industry kept faster growth. Relevant investment was also made in emerging industries. With industrial transformation and upgrading, the conversion of new and old economic drivers is accelerated.
Industrial economic data reflects influence of supervision on environmental protection
According to statistics released by the National Bureau of Statistics (NBS) yesterday, value-added industrial output of enterprises above the designated size hiked by 6.0 percent in August, with growth rate down by 0.4 percentage points from July.
Zhang Liqun, an economist at the State Council’s Development Research Center said in an interview with reporter from Shanghai Securities News (SSN) that slower growth of industrial output in July and August was a result of weather factor like high temperature and rains. In addition, de-capacity and supervision on environmental protection also exerted certain influence no industrial output.
As the central government promoted supervision on environmental protection, local regions across the country joined it since the beginning of this year. The latest detailed statistics can further showed the impact of de-capacity and supervision on environmental protection.
According to NBS, added value of mining sector decreased by 3.4 percent from a year earlier in August, and growth in output of major industrial products such as coal, cast iron, crude steel and nonferrous metal also slowed down a little. Besides, added value of high-energy-consumption manufacturing sector was an increase of 2.9 percent, 0.4 percentage points lower than that in July.
“Drop in growth of high-energy-consumption manufacturing sector implied that various regions and departments are striving to stick to the new development concept.” said NBS spokesman Liu Aihua.
Liu added at the press conference of Information Office of the State Council that implementation of this concept will not only improve the quality of growth in the short term but will also enhance economic growth in the medium and long term.
Noticeably, while industrial output decreased out of expectation, purchase management index (PMI) of manufacturing industry and producer price index (PPI) climbed. In the opinion of Niu Li, head of macro-economy department of State Information Center, this resulted from supervision on environmental protection. In order to govern and control pollution, many manufacturers which failed to meet requirements of environmental protection were closed, pushing up prices of raw material in upstream industry. This is the cost they have to pay during the process of China’s economic transformation.
Rise of emerging industries become new highlight of growth
The downturn in energy-intensive industries and the gradually rise of emerging industries have become new highlights in economic growth. And the latter can be evidenced by many data.
For example, the added value of the high-tech industry and equipment manufacturing industry respectively increased by 12.9 percent and 11.6 percent year on year in August, up 0.8 and 0.9 percentage points from July, and much higher than the overall growth rate of industry.
Investment in the high-tech industry and equipment manufacturing industry also maintained a rapid growth. In the period from January to August, the investment in equipment manufacturing increased by 8.2 percent year on year, 4.6 percentage points higher than that of the same period of last year. The investment in high-tech industry increased by 17.8 percent year on year, 2.3 percentage points higher than that of the same period of last year.
It is worth mentioning that investment in equipment manufacturing has become the main force of manufacturing investment, contributing 73 percent to the growth of manufacturing investment.
CITIC Securities chief economist Zhu Jianfang said that the highlight of industrial growth lies in the gradually rise of emerging industries. This also means that there have gradually emerged new highlights in economic structure. Capital expenditures in these industries are likely to grow remarkably in the future.
Short-term data fluctuations will not change the trend of stabilizing and recovering
The value-added of industry, investment and consumption continued to fall in July and August, raising the market’s concerns over the economic movement for the second half of the year.
In this regard, Zhang Liqun told the SSN reporter that “the fluctuations in macroeconomic data in July and August are mainly due to short-term factors. They have no value for judging the tendency. On the whole, the economy shows clear trend of stabilizing and recovering.”
He analyzed that based on the sales of industrial products and the profits of industrial enterprises, manufacturing investment and private investment will continue to stabilize. Growth of industrial production will also rebound. Driven by the process of urbanization and improvement of weak links, infrastructure investment will remain active. In addition, consumption remains stable. Exports are much better than last year. On the whole, the basic conditions for a steady economic growth have not changed.
Recently, high-level officials expressed bullish opinions on the economy for the next half of this year. Premier Li Keqiang pointed out at the recent “1+6” Roundtable with heads of major international economic institutions that China’s economy grew 6.9 percent in the first half of this year, and will maintain stable performance with good momentum for growth in the next half.
By Coral Zhong & Vanessa Chen