ASIA Recalibrating China’s high-octane engine for growth

Nov 01, 2007 | 07:51 AM |

China's growth continues to outpace predictions. The country's economy grew a stunning 11.9 percent in the second quarter, according to official figures, although many analysts think the true growth rate could have been even higher. Investment, currency reserves and now inflation also are outstripping earlier estimates, with huge repercussions for the global economy.

In the steel sector, the picture is slightly more complex. Chinese crude steel output continues to grow at an incredible pace and looks likely to rise by at least 60 million tonnes to more than 480 million tonnes this year. The growth rate is slowing, however; steel production rose 13.6 percent year-on-year in August, down from 14.5-percent growth in July and around 20 percent at the start of the year.

That trend looked set to level out beginning in September as domestic demand entered its peak season, but there are some reassuring signs for Western steelmakers that the Chinese government's attempts to slow growth are bearing some fruit, albeit slowly.

The evidence of the steel industry's continuing expansion—and even the hints that output growth may be coming under control—have caused many analysts to rethink their predictions for the sustainability of the current growth cycle. In particular, demand for steelmaking raw materials—especially iron ore—looks set to surpass many short-term estimates.....

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