China industries expand in Oct; chem output surges 25.4%

11 November 2009 08:40  [Source: ICIS news]

By Judith Wang

SHANGHAI(ICIS news)--Industrial output in China jumped 16.1% year on year in October, with the chemical sector logging in a strong 25.4% growth, official data showed on Wednesday, indicating that the world's third largest economy is on a firm recovery mode.

The output growth last month was 7.9 percentage points higher compared to the same period last year and 2.2 percentage points higher than September's number, the National Bureau of Statistics said.

All 39 industrial divisions had year-on-year growths, including textile, which registered an 11.1% expansion in October.

“The fast growth of the industrial output indicated China’s economy is turning better under the government’s massive stimulus package,” said Lin Songli, an analyst from Beijing-based brokerage Guosen Securities.

Other economic data also showed positive developments.

From January to October, China’s urban fixed asset investment rose 33.1% year on year to yuan (CNY) 15,071bn($2,206.6bn), NBS said.

Investments in the real estate sector were expected to grow at a high speed, driving investments in other related sectors, including chemicals, said Dong Xian'an, chief economist at Shanghai-based brokerage Industrial Securities.

China's retail sales continued to show strong expansion in October, jumping 16.2% year on year to CNY1,172bn, NBS said.

Cost of goods remained low, with China’s consumer price index (CPI) dipping 0.5% year on year last year and its producer price index (PPI) falling fell 5.8% year on year in October, NBS said.

This condition allows China's central bank to keep a loose monetary policy, thereby maintaining strong credit growth. New lending in October grew 39% to CNY253bn, based on data from the People's Bank of China.

Meanwhile, the country continued to register weakness in exports, which was China's major engine of growth in the previous years.

In October, China's exports declined 13.8% to $110.76bn (€74.2bn), while imports fell 6.4% to $86.78bn, based on customs data.

Industrial Securities' Dong said that the decline in shipments out of China would probably narrow in November while imports would likely post growth.

($1 = CNY6.83 / $1 = €0.67)

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