Industrial production growth eases pace, displaying stability

A main gauge measuring China's industrial sector activities continued to expand, albeit at a slightly milder pace, evidence that the broader economy is stabilizing despite challenges.

Industrial added value expanded 8.7 percent year on year in the first four months of 2014, as solid growth of the manufacturing sub-sector offset sub-par performances of the mining and utilities sub-sectors, official figures revealed on Tuesday.

The manufacturing sub-sector saw 9.9 percent growth in added value in the January-April period, while that of the mining and utilities sub-sectors grew by 3.6 percent and 4.2 percent respectively.

China uses industrial added value to measure the business operations of designated large enterprises whose annual turnover of its main business activities surpasses 20 million yuan (3.24 million U.S. dollars).

In April alone, industrial added value also rose 8.7 percent from a year earlier, but the growth rate was 0.1 percentage points lower than that in March, evidence that the broad industrial sector is losing some steam, according to the National Bureau of Statistics (NBS) figures.

Another related report released earlier this month also pointed to strengthened momentum of manufacturing companies in April.

The purchasing managers' index (PMI) for the manufacturing sector rose to 50.4 in April, up from 50.3 in March, said the NBS and the China Federation of Logistics and Purchasing.

Regionally, industrial added value in April grew by 8.1, 8.8 and 11 percent from the previous year in east, central and west China respectively, the NBS said.

China's joint stock companies evidently outpaced state-owned peers in their industrial production.

The statistics showed that the value-added output of state-owned enterprises rose 4.8 percent in the first four months from a year earlier, while that of joint stock companies grew by 10.1 percent.

China's April economic data came in "slightly weaker" than market expectations, Lu Ting, chief China economist with Bank of America Merrill Lynch, said in a research note.

On a positive note, the 8.7-percent year-on-year industrial added value growth reading in April, if sustained in May and June, means gross domestic product (GDP) expansion in 2014 could be similar to the 7.4-percent pace in the first quarter of 2014, Lu said.

China's GDP grew 7.4 percent in the first quarter, as slower property investment and exports weighed on broader economic growth during the period.

Lu's cautiously optimistic view is echoed by other economists.

"The Chinese economy is experiencing deep adjustments with investment and consumption growth easing slowly," said Niu Li, an economist at the State Information Center, which is under the National Development and Reform Commission, China's top economic planner.

Fixed-asset investment rose 17.3 percent year on year in the first four months, but the growth rate was 0.3 percentage points slower than that for the first quarter. Retail sales grew 11.9 percent year on year in April, with the growth rate 0.3 percentage points weaker than that in March, the NBS said on Tuesday in separate reports.

The latest data showed that industrial activities and domestic demand are growing at a stable pace, while industrial restructuring is going on, said Zhang Liqun, an economist at the Development Research Center of the State Council, China's cabinet, adding that the foundation for a pick-up of China's economic growth rate is not solid.

Niu suggested that policymakers should mull further moves to support economic growth.

Despite downside risks facing the economy, top Chinese officials have publicly ruled out a massive stimulus package and have instead unveiled a raft of small-bore moves, including cutting the reserve requirement ratio for some rural financial institutions and extending a preferential tax policy for targeted groups of people to start their own businesses.