Industrial output target lowered

Cutting the country's industrial output target in 2013 to growth of 10 percent is in line with the rules of economic development, but reaching the target will not be easy given the uncertain economic outlook, the country's industry watchdog said Wednesday.

"External demand will not improve dramatically in the short term and growth of internal demand faces many restrictions. To achieve the projected 10 percent growth in industrial output in 2013 will not be easy," Zhu Hongren, chief engineer and spokesperson of the Ministry of Industry and Information Technology (MIIT), said at a press conference Wednesday.

The target of 10 percent growth for industrial output in 2013 was announced by Minister of Industry and Information Technology Miao Wei at the ministry's annual meeting in late December.

The level is the same as the 10 percent growth that was achieved in 2012, which was just below the target for the year of 11 percent growth, and well below the growth of 13.9 percent recorded in 2011.

"As the country's industrial sector develops to a certain level, its potential growth will slow down, which conforms to the rules of economic development. We are cutting the industrial output target to focus on quality and efficiency," Zhu said.

"The government is expected to cut its GDP growth target for 2013. Lowering industrial output, a component that contributes to GDP growth, comes as no surprise and could help encourage various industrial sectors to shut down outdated capacity," Li Huiyong, chief economist at Shanghai-based Shenyin Wanguo Research & Consulting, told the Global Times.

The country's economic expansion slowed to 7.8 percent year-on-year in 2012, the slowest pace since 1999. The GDP target in 2013 is expected to be announced at the sessions of the national legislative and consultative bodies in March, but many economists and research institutes have forecast it will be between 7 and 7.5 percent.

Industrial output accounted for at least 40 percent of GDP growth in 2012, according to the MIIT.

"The government has set the target for industrial output at 10 percent in 2013, but in reality it may grow faster, by around 11 percent, because the economy in 2013 will grow faster than in 2012," Tang Jianwei, a researcher with the Bank of Communications in Shanghai, told the Global Times.

"After the new leadership takes office, investment will speed up and businesses' profits will also improve. These factors indicate that industrial production will grow faster this year," Tang said.

"To focus on quality of growth, industrial sectors need to expand production for consumption and replace backward equipment with more efficient and energy-saving alternatives, to help get rid of excessive production capacity," said Li from Shenyin Wanguo Research & Consulting.

On Tuesday, the MIIT announced guidelines to encourage consolidation in nine sectors, including autos, steel and rare earths as part of the country's efforts to eliminate excessive capacity.