Shanghai's industrial production expanded for the third straight month in August, led by higher output of cars, which signaled that recovery in the city's economy is being consolidated.

The value of industrial output in the city rose 2.6 percent from a year earlier to 204.7 billion yuan (US$29.9 billion) last month, the Shanghai Statistics Bureau said yesterday.

The growth picked up from the increases of 2.1 percent in July and 2.4 percent in June. Before June, the indicator of Shanghai's manufacturing fell for seven consecutive months due to the fallout of the global financial crisis.

"The stabilizing growth in industrial output is a good sign which reflects the resilience of Shanghai's economy," said Wang Zehua, a bureau analyst. "The domestic demand boosted by the stimulus package has in part compensated the losses brought by fewer overseas orders."

Shanghai's gross domestic product climbed 5.6 percent in the first half of this year on an annual basis, improving from a record low of 3.1 percent in the first quarter. The local government targeted a growth of 9 percent for the whole year.

However, Shanghai's manufacturers face a bumpy road ahead, as the city's industrial sector remained too export-oriented and it would take time for reform to take place in the manufacturing structure, said Zhou Bo, director of the Shanghai Municipal Development and Reform Commission, at a meeting to brief local lawmakers on the city's economy.

"Manufacturers in Shanghai are more reliant on exports compared with those in other cities, thus they suffer deeper from the deteriorating external demand," Zhou said. "Besides, Shanghai exporters are generally bigger in size, and thus less navigable to carry out a reform in structure."

The city's six key industries - electronics, vehicles, fine steel, petrochemical processing, machinery equipment and biomedicine - posted a combined output value of 134.2 billion yuan last month, up 8.9 percent from a year earlier.

Vehicle output led with a jump of 72.4 percent to 22.8 billion yuan.

(Shanghai Daily September 11, 2009)