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China's industrial production expanded at a faster-than-expected 13.9% in August compared with a year ago, showing that the world's second-largest economy continued to maintain economic momentum despite a government clampdown on bank lending and property speculation. However, inflation quickened to a 22-month high, reflecting adverse weather conditions that led to higher food prices.
Data released by the China's National Bureau of Statistics on Saturday showed that industrial production in August was stronger than the 13.4% rate recorded in July. Economists had expected a more modest 13% growth.
All the 39 industrial divisions reported year-over-year growth, with textile industry growth up 11.6%, while raw chemical materials and products recorded a 12.9% increase. General machinery manufacturing was up 20.1% and manufacture of transport equipment registered an increase of 16.6%.
In the first eight months of the year, China's industrial production was up 16.6% year-on-year, but down by 0.4% point over the first seven months of the year.
Meanwhile, urban fixed assets investment was up 24.8% year-over-year to 14.1 trillion yuan for the first eight months of the year, but down 0.1% points from the first seven months of the year. Of this total, state-owned and state-controlled investment rose by 20% to 5.85 trillion yuan, while property market investment surged 36.7% to 2.84 trillion yuan.
Foreign investment increased 2.5% to 488.7 billion yuan in the first eight months of the year from last year. Investment from Hong Kong, Macao and Taiwan was up 15.8% to 445.4 billion yuan, while domestic enterprise investment rose 26.3% to 13.11 trillion yuan.
Meanwhile, China's retail sale of consumer goods in August rose 18.4% year-over-year to touch 1.26 trillion yuan. The growth rate in August was up from the 17.9% increase in July.
Total retail sales for the first eight months of the year was 9.75 trillion yuan, representing a a year-on-year growth of 18.2% and maintaining the same level as that in the first seven months of the year. Retail sales in urban areas grew 18.8% to reach 1.09 trillion yuan and the retail sales in rural areas increased 15.9% to 164.0 billion yuan.
At the same time, China's consumer price index or CPI, a major measure of inflation, rose to 3.5% in August from one year earlier. The pace of consumer price growth quickened from 3.3% in July. However, the increase was in line with expectations. Economists expect the inflation pressures to weaken in the coming months as the effects of adverse weather conditions such as floods fade.
Food prices, which account for about one-third of the weighting in calculating the CPI, increased by 7.5% year-over-year, while the non-food price increased by 1.5%. The prices of consumer goods went up by 3.8% and the prices of services grew by 2.4%.
On a month-on-month basis, the change of consumer price was up by 0.6% in August from July. In the first eight months of the year, China's CPI increased 2.8% year over year, up from a 2.7% increase in the first seven months of the year. In march, the Chinese government set a target of keeping the full-year inflation rate at around 3% this year.
The producer price inflation rate for August was 4.3%, tamer than the 4.5% rate forecast by economists and lower than the 4.8% increase recorded in July. The producer price index is a major measure of inflation at the wholesale level.
The timing of the release of data by China on Saturday, two days ahead of schedule, had prompted speculation that the results could pave the way for the government to announce an increase in interest rates before markets open on Monday.
Data released by China on Friday had showed that the country's trade surplus narrowed in August as imports picked up at a faster pace and exports slowed. China's trade surplus dropped to $20 billion in August from an18-month high of $28.7 billion in the previous month. The data is likely to keep up pressure on Beijing to ease currency controls.
China has already dethroned Germany to become the world's largest exporter, with Germany's export revenue of $1.12 trillion in 2009 falling short of China's $1.20 trillion revenue for the same period.
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