Industrial output rises 16% in October
(AP)
Updated: 2005-11-15 13:53

China's industrial output grew at a robust annual rate of 16.1 percent in October, the government reported Tuesday, but economic planners warned that major industries such as steel and autos are producing too much to keep up with demand.

China's industrial output in October totaled 632 billion yuan (US$78 billion; euro67 billion), the National Bureau of Statistics said, with the annual rate of growth slowing to 16.1 percent from 16.5 percent in September.

While some Chinese officials say both export demand and domestic demand are supporting strong growth in output, members of the country's top planning agency are starting to warn of overcapacity.

Excess capacity in the steel industry is likely to exceed 100 million tons this year, with the situation forecast to grow worse in coming years, the state-run newspaper China Business News cited Jia Yinsong, an official with the National Development Reform Commission, as saying at a recent business conference.

Demand for steel is expected to total about 3 million tons in 2005 and to rise only marginally in years to come, to about 320 million tons by 2010, the report said.

Meanwhile, steel output capacity was estimated to have reached 410 million tons by the end of 2004. By 2006, it is expected to reach 490 million tons and by 2008, to rise to 530 million tons, the report said.

Earlier, state media cited another commission official as saying that China's auto production capacity could be twice the country's actual demand by the end of 2010.

"The industry is facing a grave overproduction situation," the official Xinhua News Agency quoted Chen Bin, deputy director of the commission's Industrial Department, as saying.

China's annual auto output capacity is already at 8 million complete units, with another 2.2 million units of annual capacity under construction and soon due to be completed, the report said.

Auto sales are expected to reach about 5.5 million units this year and 9 million by 2010.

Without government action to curb investment, China's auto factories could be turning out up to 20 million vehicles a year by 2010, Chen said.

China's auto output reached 5 million units in 2004, putting it close to overtaking Germany as the world's third biggest auto producer, behind the United States and Japan.

Other industries grappling with overcapacity include cement, aluminum, household appliances and electronics. The government has sought to curb investment in redundant plants.

The statistics bureau reported that auto output surged 13.2 percent in October over a year earlier, with production of rolled steel up 23.6 percent and output of crude steel up 19 percent.

Meanwhile, output of crude coal rose 10.8 percent and electricity generation rose 9.4 percent.

The government has been encouraging more investment in those key industries to help bridge energy shortages, although it has also warned that within two years China will also be producing more electricity than it needs.