China Industrial Output Data Reflects Strength

China Industrial Output Data Reflects Strength

China’s value-added industrial output, an important economic indicator, expanded 6.8 percent year on year in the first quarter, compared with the 6.3-percent increase for January to February, official data showed Monday.

The 6.8-percent growth rose from the 5.8-percent increase in the same period of 2016. It was also higher than the 6-percent annual gain seen in 2016, according to the National Bureau of Statistics (NBS).

Industrial output, officially called industrial value added, is used to measure the activity of designated large enterprises with annual turnover of at least 20 million yuan (2.9 million U.S. dollars).

In March, industrial production expanded 7.6 percent year on year, NBS data showed.

Ownership analysis showed that industrial output of state-holding enterprises was up 6.2 percent in the first quarter, while output of share-holding enterprises grew 6.9 percent. Meanwhile, industrial output of enterprises funded by overseas investors increased 6.9 percent.

Fixed-asset investment expanded 9.2% as of March 31, compared with 8.1% growth for all of 2016. However, investment in infrastructure jumped 23.5%. While that marks a slight slowdown from February’s 27.3%, it remains the fastest pace of growth in at least three years. The government this month announced plans to build a new city — Xiongan New Area — that may become the nation’s biggest ever infrastructure project.

Investment in property development rose 9.1% in the quarter, from 8.9% in the first two months and 6.9% in 2016. A combination of more land and housing supplies and a more forceful crackdown on speculative binge of apartment units across the most popular cities may put the market back in balance over the longer run, but for the time being, demand dominates.

There are some signs the government may be finding traction with its efforts to pour iced water on the most overheated parts of the property market: growth in both sales and investment appears to have moderated in the red-hot eastern seaboard; in China’s western and central regions, activity has surged.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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