China’s industrial output for January and February grew 16.2 per cent from a year earlier, providing fresh evidence that the economy is making a strong start to 2006 after three years of growth averaging 10 per cent.

The figure, issued by the National Bureau of Statistics, followed strong growth figures for exports and retail sales.
“Demand is strong, therefore production should be strong, so there’s no reason for us to believe the current growth momentum is going to lose steam meaningfully in the coming months,” said Qu Hongbin, an economist at HSBC in Hong Kong.
The rise, exactly in line with market forecasts, was a touch weaker than December’s 16.5 per cent but economists said it probably did not signal the beginning of a slowing trend.
Factories churned out 40.6 per cent more automobiles in the first two months than a year earlier, while output of steel products and cement both rose by 21.3 per cent.
With China’s middle class expanding steadily, Standard & Poor’s said in a new report that it expected car sales in China to grow at an average at least 10 per cent to 15 per cent per year over the medium term.
Rob Subbaraman, an economist at Lehman Brothers in Tokyo, said it was striking that industrial production continued to grow strongly while inflation remained so low. Consumer prices rose just 0.9 per cent in the year to February.
“It continues to suggest that there is an emerging problem of oversupply in the economy and that all efforts need to focus on promoting consumption,” Subbaraman said.
The government is cutting taxes and increasing support to the countryside in an effort to spur household spending and, in doing so, to wean the economy off exports and related investments.
Meanwhile, China said it would impose unspecified restrictions on iron ore imports, citing the need to create a level playing field in the sector’s international trade.
Restrictions on prices and quantities of imported ore would ensure a more “healthy” development of its ore-dependent industries, the Ministry of Commerce said on its website.
China is currently involved in negotiations with Australia’s Rio Tinto, BHP Billiton and Brazil’s Companhia Vale do Rio Doc, the world’s three largest iron ore exporters.