Como se combate o populismo? "Com eleições", responde Fukuyama

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China's Industrial Output Rises 16%, Beats Forecasts (Update7)

May 18 (Bloomberg) -- China's industrial output rose 16 percent in April, faster than the highest forecast by economists, as companies including Royal Philips Electronics NV and Quanta Computer Inc. moved production to the nation.

The gain followed a 15.1 percent increase from a year earlier in March and exceeded the median 14.6 percent growth forecast in a Bloomberg News survey of eight economists. Production of computers jumped 69 percent, with laptop output more than doubling, according to Beijing-based Mainland Marketing Research Co., which releases figures on behalf of the government.

Overseas manufacturers are expanding in China to tap rising demand and take advantage of wages that the Asian Development Bank estimates are 4 percent those in the U.S. Chinese stocks fell after the report increased concern that Premier Wen Jiabao will tighten year-old lending controls in a nation that is the world's largest consumer of steel and second-largest user of oil.

The pickup in production reflects ``the structural story of China integrating into the global supply chain,'' said Tim Condon, head of Asian Financial Markets Research at ING Bank NV in Singapore. ``When you overlay that with the domestic boom, you have an unsustainably strong investment story.''

Condon's 15 percent production growth forecast was the highest in the Bloomberg survey, along with that of DBS Group. He estimates fixed-asset investment, which the statistics bureau is due to report tomorrow, rose 24.5 percent in April after increasing 26 percent in March.

Stocks Fell

China's industrial production reached a record 564.7 billion yuan ($68 billion) last month, with output of raw steel climbing 25 percent and that of cement gaining 9.6 percent. Steel and cement are among the industries targeted by the government's lending controls.

The Shanghai Composite Index, which tracks yuan-denominated A shares and foreign-currency B shares on the city's stock exchange, dropped 0.8 percent, to 1091.41 at 1:43 p.m. local time. The Shenzhen Composite Index, which tracks the smaller of the two Chinese markets, lost 1.1 percent, to 265.76.

``Economic growth is not slowing,'' said Li Yan, who helps manage the equivalent of $3.62 billion at Harvest Fund Management Co. in Shanghai. ``The government might need to do more to rein in expansion.''

China's economy expanded 9.5 percent in the first quarter, exceeding the government's prediction of a maximum 9 percent and the official 8 percent target. That pace of growth may be sustained this year, the Institute of International Finance said May 5, because foreign investment is foiling government efforts to rein in industrial expansion.

Hiring and Firing

Amsterdam-based Philips, Europe's biggest consumer- electronics maker, said April 20 its Chinese factories last year increased sales 20 percent to $9 billion, of which 60 percent came from exports. Chief Executive Gerard Kleisterlee, who has fired 50,000 workers since taking office in 2001, says the company will continue expanding and hiring in China, where it has invested $3.4 billion.

The company's sales in China grew by an annual average of 7 percent in the past two years, according to Bloomberg data. That compares with a 10 percent annual decline in the Netherlands, a 9 percent decrease in the U.K. and a 13 percent drop in the U.S. during the same period.

Moving to China

Industrial output in the U.S., the world's biggest economy, had the biggest drop in eight months in April, the Federal Reserve reported yesterday. Production in Germany, the U.K., France and Italy -- Europe's four largest economies -- fell in March, official figures show.

Quanta Computer Inc., the world's biggest notebook computer maker, said May 4 it will move mass production of the products to China and cut 800 manufacturing jobs in Taiwan to reduce costs.

``Moving production to China is the only way for Taiwan manufacturers to stay competitive,'' Chief Financial Officer Tim Li said at the time.

DaimlerChrysler AG, the world's fifth-largest vehicle maker, last month said it plans to build Chrysler compact cars in China to export to the U.S. to take advantage of lower costs. Volkswagen AG, Honda Motor Co. and General Motors Corp. already manufacture for export in China, contributing to the nation's 6.8 percent increase in auto production last month.

As production of cars, computers and other goods increases, China's power supplies are being strained. Power cuts affected 24 of the nation's 27 provinces last year and shortages are the government predicts more shortages this year.

China's electricity generation increased 13 percent in April and coal output rose 5.4 percent, lagging growth in overall production.