Industrial output accelerates but pressure remains in China

China's industrial production expanded at a faster pace in May, adding to signs of a stabilizing economy, according to the National Bureau of Statistics (NBS) on Friday.
The industrial added-value output rose 8.8 percent in May from a year ago, accelerating 0.1 percentage point from the April figure, the NBS data showed.
On a monthly basis, industrial output in May rose 0.71 percent from April.
For the January-May period, the total output in the industrial sector increased 8.7 percent year on year, a growth rate that tied with that in the January-April period.
Value-added industrial output measures the value of gross industrial output minus intermediate input, such as raw materials and labor costs.
The latest industrial reading was in line with the purchasing managers' index (PMI) in China's manufacturing sector in May, which rose to 50.8 and marked the highest level this year.
"Such signs show that the economy is stabilizing amid the current economic slowdown," said Niu Li, director of the macro projection department with the State Information Center. "The better readings indicate the government's policies to spur the economy are starting to show effects."
The Chinese government has launched a series of "mini-stimulus" measures, including quickening investment approval, tax breaks for small business and targeted cuts for rural lenders, to arrest the current slowdown.
"The current economic growth rate is acceptable within reasonable ranges, but the decelerating risks are still there," Niu said, projecting flat or slower economic growth in the second quarter.
China's gross domestic product grew 7.4 percent in the first quarter of 2014, weaker than the 7.7 percent recorded in the October-December period and the worst pace since a similar 7.4 percent expansion in the third quarter of 2012.
Wang Jun, a researcher at the China Center for International Economic Exchange, said the government's mini-stimulus measures helped stabilize market expectations and boosted confidence.
The government's policy fine-tuning in April came a bit early this year, as similar measures were launched in June and July last year.
However, the pressure for the world's second-largest economy persists, as overcapacity, shadow banking and a cooling real estate market will continue to weigh on the economy "for a couple of years," Wang said.
Arresting the economic slowdown is important as China needs a sound environment for structural reforms.
"If expectations continue to worsen, it will do no good for economic restructuring and deeper reforms," he warned. "We can't lower our guard too early as industrial growth has been below 9 percent for several months."