What China’s Industrial Production Says about Its Growth
China’s industrial production in August
According to a report from the National Bureau of Statistics of China, the country’s industrial production rose 6.3% in August 2016 compared to 6.0% in the previous month. The figure beat market expectations of a 6.1% rise. It was the highest reading since March 2016.
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The rise in industrial production was mainly due to the rise in electricity, gas, and water production, and manufacturing. The manufacturing sector showed an improvement of 6.8% and electricity, gas, and water production showed an improvement of 7% in August 2016. However, mining production fell 1.3% during the same month. China’s fixed-asset investments expanded 8.1% from January to August 2016, which was the same pace as the January–July period.
Impact on the economy
A rise in industrial production is a good sign for the economy. The slowdown in China’s economy has affected the whole world (ACWI) (VEU) (VTI), as China (YINN) (FXI) is a main trading partner for most other economies. In our previous article What Does China’s August Trade Data Indicate, we saw that China’s (FXI) (YINN) exports fell by 2.8% in August as compared to a 4.4% drop in the previous month. China’s imports rose by 1.5% compared to a 12.5% drop in July.
Improving imports are signaling increasing domestic demand in the economy. China’s domestic demand improved in August. Over the last six months, we’ve seen that China’s (MCHI) (ASHR) economy is transitioning. It’s changing from a manufacturing hub to a consumption-based economy. This process will speed up economic growth in the country.
In the next part of this series, we’ll analyze the performance of China’s retail sales in August 2016.