Booming exports helped sustain China's industrial output growth at a high level in August amid signs local manufacturers are trying to use overseas markets to make up for weakening demand at home.
Chinese factories reported production last month of 596.8 billion yuan (73.7 billion dollars), up 16 percent from a year earlier and a rise of 2.7 percent from July, the National Bureau of Statistics said Wednesday.
Analysts said the figures point to sustained growth in China and appear to belie talk of an imminent economic slowdown.
"People in my view have been putting too much emphasis on the slowdown of the economy," said John Cairns, emerging Asia economist with IDEAglobal in Singapore. "Even late last year we saw these economic indicators start picking up again. It's indicative of a rebound," he said.
August production growth was nearly unchanged from the 16.1 percent year-on-year increase in July while for the first eight months of 2005, output was up 16.3 percent, the NBS said. Soaring exports were the major driver, with factories shipping 21.3 percent more to overseas markets, it said.
China's trade surplus in August reached its third-highest monthly level ever at 10.04 billion dollars, sparking concerns that fresh spats with its trading partners, and especially the United States, are possible over their mounting deficits.
At the same time, in an indication of growing over-capacity, nearly two percent of last month's output failed to find buyers, the NBS said.
This situation is worsening rather than improving, the bureau said, reporting that 98.28 percent of output was sold in August, down 0.51 percentage point from the same month in 2004.
These two facets of the August data - soaring exports but falling sales - could indicate Chinese industrial enterprises are turning increasingly to the world markets to offload goods they cannot sell to domestic consumers, said Cairns of IDEAGlobal.
Observers have warned for months that China is building up capacity at a rate far too aggressive for potential demand, especially in certain key sectors such as autos.
Wednesday's statement seemed to confirm this view, showing for example, that sedan output increased 46.3 percent in August from a year before.
The auto industry has been under pressure for months as ever increasing capacity makes for cut-throat competition, coupled with government efforts to keep the economy from overheating.
China's steel industry, the world's largest and which is undergoing a major restructuring in hopes of making it more competitive, continued to see strong growth last month.
Output of steel and pig iron both jumped 27.6 percent from a year earlier, while raw steel increased 26.8 percent, the NBS said.
China's huge appetite for steel and basic commodities means its macroeconomic figures are studied with increasing interest overseas and attract a growing amount of commentary.
In Sydney on Wednesday, Macquarie Bank senior commodities analyst Jim Lennon told a group of industry participants that iron ore will attract record high prices as demand from China continues to underpin a 'bull' market.
Lennon said that while the current frenetic pace of growth in China is unsustainable and a correction is possible in a year, "more pessimistic forecasts are wrong.
"My feeling is we continue to underestimate growth in China," he told his audience.
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