As readers may know, power use is considered a good gauge of economic activity. And while many have pointed to loan growth as an indicator that China is making a recovery, energy consumption has yet to confirm it.
From ChinaStakes (hat tip reader Michael):
Power generation in China dropped again in April, indicating that the macroeconomic rebound the market has expected is yet to appear.
According to the State Grid’s latest statistics, April’s national power generation totaled 274.763 billion kwh, a fall of 3.55%, year on year, and a decline of over 3% from the previous month.
The Ministry of Industry and Information Technology says that in the first three months of this year, China’s power consumption totaled 780.990 kwh, down 4.02%, year on year, and power consumption in March alone totaled 283.389 kwh, down 2.01%….
Zhu Baoliang, an expert at the State Information Center, says the main reason for South China’s power generation decline is the recessionary fall in agriculture and light industry exports. “External demand may not recover until the end of the second quarter.”
Or not even then. Judging from current statistics, financial turmoil is spreading from coastal areas to inland China. “Although the mining and equipment-manufacturing industries can better resist risks, they are also currently in an adjustment period. Steep power generation decline in April is not surprising at all,” said Zhu Baoliang.
The China Electricity Council had estimated China’s power consumption in April would continue to fall, and would drop below that in March. Although the decline in March slowed, expectations for power consumption in April were not optimistic. Experts predict power consumption growth will be low in the first half of the year and rise in the second half.
In the short term, there’s still heavy pressure for economic slowing. Although PMI is continuing to rebound, some sub-indicators such as materials and finished product inventories are falling back again, indicating no increase in terminal demand. Wang Yonggan, secretary general of the China Electricity Council, thinks the first two quarters of this year may be the hardest time and may continue to see negative growth. Power demand in the whole nation, especially in coastal areas, may see positive growth in the third quarter, which, it is hoped, will promote power consumption growth in the middle and west of China in the fourth quarter.