H1 Growth Meets Expectations   

China's GDP in H1 was RMB13 986.2 billion, growing 7.1% over the prior-year period, according to a news release from Li Xiaochao, an official of the National Bureau of Statistics (NBS) on July 16th. The annualized growth was 6.1% for Q1 and 7.9% for Q2.
   In H1, the designated industrial enterprises (all state-owned enterprises and non-state-owned enterprises with annual sales of over RMB5 million) achieved a 7.0% gain annually in the industrial value added, compared with the 16.3% annual growth in the same period of 2008. The annualized growth was 10.7% for June alone (8.9% in May), 5.1% for Q1 and 9.1% for Q2. Among all, the heavy industries totally posted a year-on-year growth of 6.6% in H1, and the light industries posted a combined growth of 8.2% year over year. By regions, the eastern region had a growth of 5.9% annually, the central region 6.8% and the western 13.2%. All 39 industrial sectors defined by NBS posted positive annual growth in June, and 36 sectors reported a year-on-year growth in H1 with the remaining three sectors each registering cumulative decline. Seven of the sectors are related to the chemical industry.

Year-over-Year Growth of Industrial Value Added in the
Chemical Related Sectors   (%)
Sector                              in May    in June    in H1    in Q1                                                        
Petroleum and natural gas exploration    9.1     11.0    9.7     9.1
Petroleum processing and coking          0.6     3.2     -2.9    -5.4
Chemical raw materials & product manufacture    11.1    9.0    7.2    3.7
Pharmaceuticals manufacture             14.8    13.3    14.0    15.1
Plastic products                         10.2    13.8    9.2     7.5
Rubber products                          10.7    13.3    5.3     -0.6
Chemical fiber manufacture              13.5    16.2    3.9     -4.3
Textiles                                  8.3     9.3     7.3     6.1
Source: NBS

    In H1, among the 84 petroleum and chemical products being tracked, 50 witnessed an output increase compared with the prior-year period. Coal output in H1 increased 8.7% year on year to 1 356 million tons, with an annual growth of 15.9% in June. The output of pig iron, crude steel and steel preparations annually increased 5.6%, 1.2% and 5.7% respectively in H1. Cement output amounted to 734.6 million tons in H1, up 14.9%. Automobile output reached 6.23 million units in H1 with an annual growth of 16.4%, the annual growth in June was 38.8%. In which, the sedan output was 3.23 million units, up 16.3% annualized. Electric power generated in the whole country increased annually 5.2% in June, but plummeted 1.7% for H1.
    In H1 the total sale/production rate was 97.2% on average.
    In the period of January to May, the designated industrial enterprises reported a total profit of RMB850 billion, a decline of 22.9% than the year-ago period. Among the 39 industrial sectors, 19 suffered reduced profits while some sectors enjoyed a good profit gain or achieved income after losses in H1 of 2008, according to Li Xiaochao.
    In a report of the Ministry of Finance, all state owned and state controlled enterprises, with the exception of financial enterprises, reported a cumulative sales revenue of RMB9 794.2 billion in H1, a decline of 5.9% from the prior-year period, compared with the 7.4% fall annualized in the first five months this year. Revenues in June grew 19.7% more than in May. The combined profit was RMB553.4 billion in H1, down 27% year over year, compared to the 30.3% fall annualized in the period of January to May, 32.3% in January to April, 36.8% in Q1 and 43.7% in January to February. Profits in June were 29.4% higher than the preceding month.
    In H1 the whole country's investment in fixed assets increased 33.5% year on year to RMB9 132 billion, compared with the 26.3% increase annualized in H1 of 2008. By region, the eastern region grew 26.7% year over year, the central region 38.1% and the western region 42.1%. The investment in infrastructures, with the exception of the electric power sector, increased 57.4% over the prior-year period. Investment in railways surged 126.5% annually, water, environment and public facilities 54.5% and healthcare, social guarantees and welfare 71.3%.  
   The National Development and Reform Commission (NDRC) reported that construction on 176 090 new projects was started in the first six months with a total planned investment of RMB7 383 billion, 53 049 projects more than one year earlier and a 87.3% growth in planned investment.  
    Exports and imports combined reached US$946.1 billion in H1, an annual decline of 23.5% - US$521.5 billion in exports, down 21.8%, and US$424.6 billion in imports, down 25.4% - and the trade surplus was US$96.9 billion, a slight fall of US$2.1 billion over the year-ago period.
    NBS said domestic sales and markets have remained stable in H1. The retail total for the whole country was RMB5 871 billion in H1, up 15% year-on-year, actually increasing 16.6% by adjusting for price changes. The consumer price index (CPI) in H1 declined 1.1% compared with one year earlier. In June the CPI plunged 2.3% below June of 2008 and fell 0.5% than the preceding month. The producer price index (PPI) declined annually by 5.9% in H1 and 7.8% in June alone. The purchase-in prices of raw materials, fuels and power plummeted 8.7% annualized in H1, and 11.2% in June. House price in 70 cities went down by 0.8% year over year.  
   Li Xiaochao commented that the CPI and PPI both stayed in the recession stage this year. CPI annually increased 7.9% in H1 of 2008. It registered a year-on-year decline of 1.6%, 1.2%, 1.5%, 1.4% and 1.7% respectively in February to June this year. Furthermore, the CPI in March dropped 0.3% from the preceding month, the month on month fall was 0.2% in April, 0.3% in May and 0.5% in June. PPI showed a similar trend with CPI, with a year-on-year fall of 3.3%, 4.5%, 6.0%, 6.6%, 7.2%