Industrial output slows: MIIT

Industrial output growth of the world's second largest economy slowed in the first quarter, facing downward pressure, but remains within an acceptable range, China's industry watchdog said Tuesday.

China's industrial output grew 9.5 percent in the first three months of this year compared with the same period last year, with investment in the industrial sector totaling 2.4 trillion yuan ($387 billion), up 17.4 percent from a year ago, Xiao Chunquan, spokesperson for the Ministry of Industry and Information Technology (MIIT), said at a press conference Tuesday.

The industrial output growth rate was 0.5 percentage points lower than the fourth quarter of 2012 and 2.1 percentage points lower than last year's first quarter, and undershot an official target of 10 percent for this year.

Yet overall industrial growth is still within an acceptable range, and "a moderate slowdown is normal since industrial development has maintained a high speed of growth in recent years," Xiao said.

Xiao admitted that the industrial economy is experiencing downward pressure derived from insufficient demand and tepid fixed-assets investment.

Industrial companies are encountering difficulties with falling prices and rising costs, Xiao said. The average profit margin of large industrial companies lingered at a low 5.18 percent in the first two months of this year despite a 17.4 percent year-on-year growth, he said.

The overcapacity issue and tightened regulations on heavy-polluting industries are accountable for the slowdown of industrial output growth, Zhou Hao, China economist at ANZ Banking Group, told the Global Times Tuesday.

Coincidentally, Tuesday saw the release of a flash HSBC Purchasing Managers' Index (PMI), a measure tracking manufacturing activities of small and medium-sized factories. The index dipped to 50.5 in April from 51.6 in March as new export orders shrank, indicating that China still faces formidable global headwinds into the second quarter.

"China is experiencing structural reform. We need to sacrifice short-term growth to attain the structural reform target," Zhou Xiaochuan, China's central bank governor, was quoted as saying last week.