Power use up just 3.7% in April as economy slows

China's electricity consumption growth rate in April was 3.7 percent year-on-year, the slowest in the past 16 months, which indicates a cooling down of the country's economy, analysts said.

Power consumption in April was 390 billion kilowatt-hours, 26 billion kWh less compared with March, according to data from the National Energy Administration.

The figure contrasts sharply with the double-digit growth rate notched up by power consumption in April in the previous two years.

"The reduced power use in April, a month that usually sees increased consumption, shows that China's economy is slowing down," said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.

The economic outlook is gloomy both domestically and internationally, and the government should pay close attention to this trend, said Lin.

In April, secondary industries' power consumption was 291 billion kWh, up 1.56 percent on the previous year.

From January to April, electricity consumption by tertiary industries and for residential use witnessed double-digit growth.

However, the reduction in industrial use, especially in light industry, is obvious, which shows that the manufacturing sector is facing difficulties.

"Overseas demand is weakening and the utilization capacity of the domestic companies is less than before," said Ouyang Changyu, assistant secretary-general of the China Electricity Council.

The European debt crisis and gloomy US economy both affected overseas markets, and this situation will continue in the long term, said Xu Wei, a researcher at the China Center for International Economic Exchanges.

"Meanwhile, domestic power consumption will grow steadily but not register any massive increase, so companies are faced with overcapacity and shrinking demand," she said.

But Xu added that demand will grow slowly by the end of the second quarter as the impact of government policies is felt.

Based on China's first-quarter economic indicators, many analysts said the nation's economy has yet to bottom out, and this could happen in the second quarter.

The central bank on Saturday cut the portion of deposits that banks must hold in reserve to encourage more credit to flow, which was seen as an effort to activate the market.

A report from Bank of America Merrill Lynch said China's second-quarter GDP growth rate will drop to 7.6 percent from the previously expected figure of 8.5 percent, and the figure for the whole year is likely to be 8 percent, down from the earlier forecast of 8.6 percent.

However, Xu said it is still too early to tell whether China will experience an economic slowdown throughout the whole of the year.

The CEC also forecasts slower growth in power consumption in the third quarter compared with the previous year.

It estimated that total power consumption in the first half of the year will be between 2.41 trillion kWh to 2.45 trillion kWh, with a year-on-year growth rate of 8 percent.

Electricity use for the whole year will be between 5 trillion kWh to 5.19 trillion kWh, up 9.5 percent year-on-year.

The CEC estimated that the nation would experience power shortages of around 30 million kWh this summer, the peak period for power consumption.

dujuan@chinadaily.com.cn