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China just released official statistics on Q4 2012 GDP and other measures. GDP rose 7.9 per cent year-over-year in the fourth quarter, slightly ahead of economists’ estimates of 7.8 per cent expansion.Growth was up from 7.4 per cent in Q3.
However, China’s official statistics often spark scepticism among analysts and investors who question the veracity of the data, which is why those observers turn to electricity data to see what’s really going on inside the Chinese economy.
BofA Merrill Lynch economist Ting Lu suggests there is little reason for electricity consumption to be manipulated, writing, “China’s local officials might be incentivized to over-report some macro indicators such as GDP and FAI, but they have little incentive to over-report use of energy including electricity as Beijing imposes increasingly restrictive regulations on energy use per unit of GDP on local governments.”
The latest data out this evening reveal that China’s power consumption declined in 2012, but crucially, it turned around in the fourth quarter, confirming the indication of a recovery from the official statistics.
Deutsche Bank analysts Michael Tong, Eric Cheng, and Kai-Ting Wong offered a detailed breakdown of the data in a note to clients following the release:
2012 national power consumption growth rate declined, while 4Q12 recovered: China’s 2012 power consumption increased by 5.5% yoy to 4,960bn kWh, with growth rate decreased by 6.5ppt yoy. National monthly growth rate had declined since March 2012. However, thanks to China’s macro control and low basement of last year’s number, the consumption volume recovered since October. The national power consumption in 1Q12, 2Q12, 3Q12 increased by 6.8% yoy, 4.3% yoy, 3.9% yoy to 1,166bn kWh, 1,210bn kWh and 1,310bn kWh, respectively, with growth rate declining qoq, while that in 4Q12 increased by 7.5% yoy, representing apparent recovery.
Power consumption for tertiary industry and residential users enjoyed fast growth: China’s 2012 power consumption for primary industry kept flat yoy to 101bn kWh, that for secondary industry increased by 3.9% yoy to 3,667bn kWh (with growth rate down by 8.3ppt yoy). That for tertiary industry and residential users increased by 11.5% yoy and 10.7% yoy to 569bn kWh, 622bn kWh, respectively, keeping at a fast growth.
Power consumption growth of heavy industry appeared a slow trend: China’s 2012 industrial power consumption increased by 3.9% yoy to 3,606bn kWh, of which light and heavy industry accounting for 608bn kWh and 2,998bn kWh, up 4.3% and 3.8% yoy, with growth rate down 5ppt and 9ppt yoy, respectively.
Power consumption growth in West China higher than Central and East China: In 2012, power consumption growth in East, Central and West China were 4.4%, 4.9% and 8.3%, of which growth rate in West China 3.9ppt and 3.4ppt higher than that in East and Central China.
Clean Energy power output soaring: In 2012, coal-fired power output increased by 0.3% yoy to 3,911bn kWh. China had digested 1,066bn kWh of clean energy power, up 28.5% yoy, of which hydro power up by 29.3% yoy to 864bn kWh, nuclear power up by 12.6% yoy to 98bn kWh, wind power up by 35.5% yoy to 100bn kWh and solar power up by 414% yoy to 3.5bn kWh.
After 5.5 per cent electricity consumption growth in 2012, China’s State Electricity Regulatory Commission expects to see 9 per cent growth in 2013.