China's industrial production slowed down its soaring growth in January, as the government's efforts to cool down the economy continue to have an impact.

Industrial production, an important gauge of the national economy, increased by 20.9 percent year-on-year to 484.4 billion yuan (US$58.6 billion) in January, the National Bureau of Statistics (NBS) announced on Friday.

The nominal January figure is higher than the nearly 15 percent year-on-year growth rate in the fourth quarter of last year.

But the real growth rate is less than half of the nominal 20.9 percent when China's week-long Spring Festival holiday is taken into account.

The holiday fell in January last year but in February this year. This means many more working days this January than a year ago.

Based on the daily average, industrial production growth is 8.9 percent greater year-on-year this January, according to the bureau.

"We believe growth is decelerating in January. But growth is not that much lower (8.9 percent) since enterprises may continue the production during the New Year holiday," said Qi Jingmei, a senior economist with the China Information Centre.

Qi said growth lagged in January because of two factors: the rapid growth rate in January last year, and the government macro-economic controls since last April.

Industrial production rose by nearly 20 percent year-on-year last January, and 17.7 percent in the first quarter of 2004.

Starting from April, the government has reined in some run-away investment in industries such as aluminium, cement and steel, in a bid to ease the shortfall of energy and to calm down inflation.

Economists said on Friday the January figures are not of much reference, because the figures tend to fluctuate due to the factor of the New Year holiday.

"The reported 8.9 percent year-on-year growth based on daily average level of industry production is misleading in gauging seasonally adjusted growth momentum, since we find that growth in daily averages is not immune to the effect of the Chinese New Year," Hong Liang, a China economist of Goldman Sachs Asia, wrote in a report on Friday.

"We would advise caution in reaching any conclusion about sequential momentum from January data alone because of the significant noise in the data," said Liang.

Economists said industry production growth would pick up in the following months, betting the economy would continue its current healthy momentum.

"The macro-control measures won't suppress growth," said Wang Zhao, a researcher with the Development Research Centre under the State Council. "The big picture of the economy is still healthy and stable at large."

Qi from the China Information Centre expects industrial production growth will rise to 12-13 percent in the first quarter this year.

The National Statistics Bureau said on Friday that exports rose 45.8 percent year-on-year to 304.3 billion yuan (US$36.8 billion). When adjusted for the holiday, the growth rate was 31.2 percent.

The sales-to-production ratio stood at 97.7 percent in January, one percentage point higher than the same month a year ago, the bureau said.

(China Daily February 19, 2005)