Why the power consumption of economic warm wind is still falling

The continued decline in electricity consumption produced a premature rebound that led to a lot of speculation that inventories would increase China's economic power consumption and industrial value-added data. Industrial growth increased by 7% per cent year-on-year in April, while industrial electricity consumption fell 7% from a year earlier, with a 14% difference (Figure 1).　　This set of data puzzles some investors and expresses whether the Chinese economy is in danger of continuing the "winter".　　The head of the National Bureau of Statistics responded by saying China's economy is growing and the whole society has negative growth in electricity consumption, mainly because of two reasons: first, the first quarter of this year's industrial structure changes, electricity consumption is relatively small growth of the tertiary industry faster; In addition, the production and consumption of high energy-consuming industries slowed, while the relatively small high-tech industry grew faster 14% difference between industrial value added and electricity consumption recent data suggest some early signs of recovery and industrial production seems to have bottomed out.　　However, electricity consumption, which represents the indicators of real economic activity, is declining to examine the real pace of economic recovery and to confuse investors. The data from the China Electric Power Enterprise Federation Show: 2009 1-April, the total consumption of the whole society 1,055,882,000,000 kwh, down 4.03% year-on-year, the decline and the basic flat in January-March.　　Among them, the April increase in industrial value year-on-year growth of 7%, and industrial electricity consumption is down 7% year-on-year, that is, the difference between the 14%. While both power demand and economic data do show signs of a quarter-on-quarter improvement, there is a huge gap between the two sets of data, Gao Securities analyst Zhou said in recent months they have conducted an in-depth study of the trends in industrial growth and electricity consumption data. The difference in annual data between 1999 and 2007 was between 0.7% and 3.8%, with an average difference of 1.3%. The difference has since widened to 8.9% in 2008 years, and appears to have continued to expand in 2009. The Government's recent general expression of the structural shift in the industrial sector to low-energy-consuming companies has led to a clear divergence of data.　　However, their analysis suggests that the above justification and increased energy efficiency may not fully explain the phenomenon.　　The economic development structure tends to improve the tertiary industry power consumption less rapid industrial increase in value and power deviation of the reasons, in the National Bureau of Statistics, the relevant head, mainly in the first quarter of this year's industrial structure changes, electricity consumption relatively small tertiary industry growth faster. In the first quarter, the tertiary industry increased by 7 to 4%, more than secondary 2.1%, and the share of gross domestic product from 42.7% to 44.3% in the same period a year earlier, surpassing the proportion of secondary industries.　　The proportion of industrial value added to gross domestic product fell to 44.1% in the first quarter of this year, from 46 to 0% in the first quarter. In addition, the growth of production and electricity consumption in high energy-consuming industries is slowing, while the High-tech industries with relatively low electricity consumption are growing faster. Power consumption of industrial enterprises above 63% leftThe top six high energy-consuming industries added 2 to 3%, down 12.5% from a year earlier.　　The use of electricity was increased from 13 in the first quarter of 2008 to 2% per cent, to a decrease of 3.7%, and the decline exceeded the number of industrial enterprises above scale by 1.1%. "While the economy is growing and electricity consumption is negative, the trend is quite consistent," he said.　　The official of the Bureau of Statistics said that since last year, by February this year, the increase in industrial growth rate continued to decline, the corresponding output also continued to fall, 1-March industrial growth rate rebounded, the same period of increase in power generation growth has also rebounded. "The first half of the Chinese economy is likely to hit the bottom in a warming economy, and it is now clear that it is not science to compare the overall economic growth rate with some of the growth in energy consumption," he said.　　Said Chen Dongki, deputy Dean of the NDRC's Macro Research institute. Chen Dongki said that the economic development structure tends to improve, the economic adjustment period forced the enterprise to adjust structure. He outlined new trends in recent structural adjustment: lower-end industrial growth slowed, but infrastructure and services growth accelerated, certainly not back to the crisis, faster than the slowdown in the industry itself, including now financial services, tourism services, catering services.　　In other words, the improvement in structural adjustment led to a decrease in electricity consumption. Energy-intensive industries continue to weaken in various industries "when industrial production fluctuates greatly and the various industries are in different conditions, it is not necessarily more reliable to examine the overall operation of the economy by electricity consumption." But it is also to be seen that production in some energy-intensive industries is still falling or continuing to weaken.　　Said Wang Tao, chief economist at UBS Securities. Ms. Wang says the use of electricity has continued to fall in recent months: production declines or continues to weaken for some energy-intensive industries; factories and equipment with relatively high energy consumption have been cut more sharply and shut down more; in some industries, production has been restored to actual demand, resulting in increased inventories, which have inhibited current production,　　And it may continue to inhibit production in the future when demand is recovering more strongly. First, some of the high power-hungry sectors have been producing or falling or still very weak this year.　　Wang Tao cited the production and supply of electricity, gas and water, ferrous metal smelting and calendering, non-ferrous metal smelting and calendering, and the chemical industry, which accounted for 42% of the country's electricity consumption, but accounted for only 11% of GDP (Figure 3, Figure 4). There are other high power-consuming industries, such as cement, but the industrial value of the above four industries has either fallen or is growing at a very weak pace this year.　　It is worth mentioning that some of the main products in these industries have fallen more in the first few months of this year. Ms. Wang's view was corroborated by the industrial profit figures released yesterday by the National Bureau of Statistics. Data show: In 39 industrial sectors, 23 industries, the increase in profit growth or decrease, of which the power industry from the first quarter of the loss of 1.37 billion yuan to profit 2.19 billion; oil processing and coking industry profit 26.66 billion yuan, a big increase of 181.3% year-on-year, the steel industry profit decline slightly to 97.5%. Power consumption phased adjustment does not affect the overall warming trend "downstream capacity adjustment caused electricity consumption phased adjustment, but the adjustment does not affect the overall warming trend."　　"Changjiang Securities analyst Sing Make this judgment. Sing that the April increase in electricity consumption was only a phased adjustment, the cumulative power consumption did not appear to decline, and secondary electricity consumption is slightly better than earlier, is still in the recovery phase, the gradual recovery of industrial electricity will bring the continued growth of electricity consumption. Recently, steel production capacity has rebounded, steel prices stabilized and slightly increased. Considering the above factors, they think that the gradual adjustment does not affect the overall warming trend. Considering the effect of the high base of the same period last year, the two-quarter electricity consumption is still not optimistic, the probability of negative growth is greater.　　In the second half with the gradual decline in the base, as well as 4 trillion of investment results gradually appear, the use of electricity is expected to usher in positive growth. "Looking ahead, we think electricity will rebound later this year, but the recovery is likely to lag behind a stronger recovery in demand for metals and raw materials, a recovery that comes at a time when infrastructure-related investment is full and housing construction starts to grow." Wang Tao also supports this view. The inventory of existing products is digested, it says.　　Therefore, in 2009, we will see weak electricity consumption coexisting with relatively strong industrial production and G D p growth. Ms. Wang added: "Why is it a rebound later this year, because the premature recovery in some sectors of industrial production has led to a glut of inventories that has curbed current production." Soon after the government announced its stimulus package early last November, production in some sectors, including steel, began to rebound. At the same time, real demand remains weak, making inventories of finished goods start to rise.　　Early restocking of inventories has put downward pressure on prices and curbed current industrial production. Why, then, is the stimulus package, and the strong growth in lending that accompanies it, still not a strong recovery in demand for steel and other building materials? First, there are at least a few months of lag between the announcement of an economic stimulus package, increased bank lending and the actual construction of infrastructure projects, Wang explained. Project approval, funds in place, land acquisition, the final determination of the design plan, all need time. Real estate construction is still weak, and real estate construction is usually a high proportion of steel demand, which partly explains the current weakness in demand for metals and raw materials.