Industrial output showed strong growth of 16.6 per cent year-on-year in May, the National Bureau of Statistics said yesterday.

The bureau, which previously said growth reached 16 per cent in April, said last month's production stood at 570.2 billion yuan (US$68.7 billion).

For the first five months, industrial output rose by 16.3 per cent year-on-year to 2.59 trillion yuan (US$312.5 billion).

Wang Tongsan, a senior economist at the Chinese Academy of Social Sciences, said the overall industrial situation was good. It suggests the country's economy will continue to expand at a fast rate, he said.

Industrial output is an important indicator of the nation's economic growth, because it contributed more than 50 per cent to gross domestic product.

China's industrial output grew by 11.1 per cent last year, while gross domestic product gained at a 9.5 per cent rate.

"The economy is likely to grow more than 9 per cent in the first half of this year," Wang said.

Niu Li, a senior economist at the State Information Centre, said May's industrial output was better than expected.

The news will be music to the ears of some economists and officials concerned growth may decline too much due to the government's macro-control measures, he said.

The decline in company profits, lower consumer prices and slow import growth over the past few months have led some to the conclusion the country's internal demand has become weak a fast decline in growth of gross domestic product would result, Niu explained.

"Stronger industrial output growth is what the government and the economists want to see," he said.

Wang Zhao, a senior researcher at the State Council Development Research Centre, said the positive industrial situation suggests the economy has stepped into a new period of development.

The upgrade in consumption structure from small items such as TVs and daily-use articles to large items such as cars and houses will continue to have a big impact on industrial production and the economy as a whole, he said.

Zhuang Jian, a senior economist at the Asian Development Bank, said the economy is forecast to expand 8.5 per cent this year, 8.7 per cent in 2006 and 8.9 per cent in 2007. However, problems such as energy and transportation constraints may continue to hamper growth.

(China Daily June 16, 2005)