PCs, cars drive China industrial growth

BEIJING, July 10 A Reuters story by Scott Hillis reported that China said on Wednesday its industrial output rose 12.4 percent in June as factories cranked out more popular goods like PCs and cars and put the country on pace to post sizzling first half economic growth.

Economists already expect China to blow easily past its goal of seven percent growth in gross domestic product, or GDP, for the year.

The latest data showed the economy may be crackling along at around eight percent growth, analysts said.

With industrial output of 278 billion yuan ($33.6 billion), June was the third month in a row China has seen output rise by more than 12 percent year on year.

Many analysts apply a rule of thumb that estimates economic growth at four percentage points less than industrial output, said Victor Chan, head of China economic research for UBS Warburg in Hong Kong.

"That means we might get eight percent GDP growth in the second quarter. The data is definitely very strong," Chan said.

While June's industrial growth was slightly off May's, output has gathered steam this year, growing 11.7 percent in the first half to 1.446 trillion yuan, according to the State Statistical Bureau's report.

It rose a year-on-year 12.9 percent in May, 12.1 percent in April and 10.9 in the first quarter.

CARS, PCS LEAD THE WAY

Beijing has set a nine percent industrial growth target for all of 2002 to help the economy grow and create enough jobs to soak up the ranks of unemployed expected as the country overhauls its economy to make good on World Trade Organisation promises.

The economy rebounded from sub-seven-percent growth at the end of 2001 to grow 7.6 percent in the first quarter.

June industrial output growth was led by the electronics, communications and automotive industries.

"The electronics and telecommunications industry and the transportation manufacturing industry became the two major engines driving the relatively fast growth of overall industry," the statistics bureau said in a statement.

Production of computers nearly tripled in June compared with a year earlier, while related items such as monitors and printers saw gains from 34 percent to 49 percent. Mobile phone output climbed 27 percent in the month.

Overall vehicle production rose 33.7 percent, with that of passenger cars soaring 46.8 percent and freight vehicles like trucks and vans swelling 48.4 percent.

Those sectors made up more than 30 percent of overall growth.

Light industry rose 12.6 percent in June and 11.8 percent for the first half, while heavy industry grew 12.2 percent in June and 11.6 percent in the first six months, it said.

EXPORTS STRONG

Electronics have not only been hot sellers in China, where newly affluent urban dwellers are getting wired in droves, but are also key export items.

The value of electronics and telecoms products for export in June rose 45 percent year on year, the bureau said.

"Exports are definitely a major driving force of China," Chan said, noting that the export sector had been boosted recently as more foreign firms were shifting production to China.

Industrial output growth was likely to slow in the second half but still maintain a pace above 11 percent, said Bu Deying, deputy director of economic forecasting at the State Information Centre in Beijing.

Output was likely to keep powering ahead if the U.S. economy was at least stable, analysts said.

"The key to the second half is whether the U.S. economy will have another crisis," Bu said.

Added Chan, "It all depends on Uncle Sam."