Manufacturing News

Slowdown seen in Jan-Feb power consumption growth

China's consumption of electricity, an important barometer of economic activity, saw a slowdown in growth during the first two months of this year, raising concerns over a possible downturn in the world's second largest economy.

According to statistics released Thursday by the National Energy Administration, China's consumption of electricity in January and February reached 789.2 billion kilowatt-hours, an increase of 5.5 percent over a year earlier.

In comparison, the growth rate was 6.7 percent for the same period in 2012 and 12.3 percent in 2011.

"Such a growth figure demonstrates that our economic situation is weak at the moment," Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, told the Global Times Thursday.

But Lin also noted that relatively warm weather in recent weeks may have contributed to the slower growth in power consumption.

"China's power consumption and economic growth are linked. If the latter is higher than the former, it usually signals worsening economic conditions," said Lin.

China saw its economic growth slow to a 13-year low of 7.8 percent last year, down from 9.2 percent in 2011 and 10.3 percent in 2010.

However, Li Ying, chief economist of the State Grid Energy Research Institute, told the Global Times Thursday that there is a silver lining to the slowdown in electricity consumption, as the figures reflect a necessary economic structural adjustment.

During the first two months, the services sector consumed 13.8 percent more electricity than a year earlier, and the industrial sector just 3.9 percent more, Li noted.

"Such marginal power consumption growth for China's industrial sector, which has long been suffering from the problem of overproduction, shows that the sector has reduced its capacity," said Li.

Furthermore, fast development of the services sector will be beneficial for China's growth in the long run, as it is more environmentally friendly, Li noted.

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