CHINA’S value-added industrial production grew by a stronger-than-expected 12.7 percent year on year in August, as an increase in export orders continued to support the country’s manufacturing sector.

　　Analysts said the output growth — slightly higher than market expectations of a 12.5 rise — signaled that China’s overall economic growth has maintained its strong momentum in the third quarter of this year.

　　Goldman Sachs economist Dick Li said the continuing strong demand for Chinese exports also suggested that pessimism about the state of the global economy, particularly the U.S., might be slightly overdone.

　　State Statistics Bureau figures issued Tuesday show value-added industrial production, China’s benchmark measure of manufacturing output, grew to 263.4 billion yuan (US$31.81 billion) in August.

　　The result was 0.1 percentage point slower than the previous month’s growth rate, but much higher than the rise of 8.1 percent year on year in August last year.

　　Value-added industrial output, China’s benchmark measure of manufacturing production, rose 12 percent on year to 1.9662 trillion yuan in the first eight months of this year, State Statistics Bureau figures show.

　　The January-August result is one percentage point faster than the growth rate for industrial output in the first half of this year and 0.3 percentage point faster than the increase in January-July.

　　Growth in export orders continued to pick up growth in August with production for export delivery rising 24.9 percent year on year to 170.6 billion yuan, up from 23.7 percent growth in July and 22.9 percent growth in June.

　　Besides the persistent strength of external demand, domestic consumption also showed signs of a pickup, as illustrated by the sustained improvement in China’s automotive sector.

　　Production of transport equipment, including passenger cars and heavy and light trucks, comprised 14.4 percent of total growth in industrial output in August. The contribution from China’s electrical and telecommunications equipment manufacturing sector was 14.2 percent.

　　ABN Amro economist Marvin Wong said the output data suggested that “domestic demand is quite good.”

　　“The vehicle production pickup continues, which means that consumption demand in China is actually not bad,” Wong said. “I would even say that its quite robust.”

　　But Wong said demand from the State sector should begin to fall sharply in the remainder of the year, as government spending usually tends to ease in the second half of the year. Goldman Sachs’ Li said the production data suggests that China’s overall economy continues to maintain a high level of growth.

　　China’s gross domestic product grew 8 percent year on year in the second quarter of this year, up from 7.6 percent year-on-year growth in the first quarter.

　　“I think the implication (from the output data) is quite obvious,” Li said. “There is no slowdown in GDP growth through to the third quarter. Economic growth is still maintained above 8 percent.”

　　Li said the strong growth in export demand from China also suggested that businesses in more developed countries in Asia might be doing better than expected. He pointed out that China was the last stage of assembly for a lot of production for Japanese, South Korean and Taiwanese companies.

　　“For China, a lot of exports are to developed countries. As export growth continues to pick up in August, this means the current pessimism about external demand maybe overdone,” Li said.

　　(SD-Agencies)