China's industrial output growth slowed by 1.2 percentage points in May compared with a month earlier, due to the outbreak of SARS, the National Bureau of Statistics revealed Tuesday.

But industrial output still amounted to 319 billion yuan (US$38.4 billion) in May, an increase of 13.7 per cent compared with the same period last year, the bureau said.

Industrial output growth in May was lower than the 14.9 per cent increase in April.

Output grew by 16.9 per cent in March and 19.8 per cent in February.

For the first five months of 2003, industrial output rose a year-on-year 15.9 per cent to 1.47 trillion yuan (US$177.5 billion), the bureau said.

Yao Jingyuan, the bureau's chief economist, said SARS (severe acute respiratory syndrome) had a huge negative impact on the beverage, clothing, petroleum processing and plastics industries.

But Yao said China also witnessed a number of "bright spots" such as developments within the coal, oil and power generation sectors.

The pharmaceutical and medical industries also grew rapidly in May, up 35.4 per cent.

In the month, industrial sector exports hit 205.8 billion yuan (US$24.8 billion), a year-on-year increase of 26 per cent.

The sector's growth rate was 2.8 percentage points lower than the previous month, the bureau said.

Wang Zhao, a researcher with the Development Research Centre under the State Council, said the slow-down in industrial production will only be temporary.

"Production may continue to slow down in June, but will pick up in July," he said.

Wang said when looking at the whole of 2003, SARS will not have a widespread negative impact on the industrial sector, which contributes more than 50 per cent to the national gross domestic product.

And although SARS will not deliver a significant negative blow to investment, he says it will have some effect on domestic spending, especially in the tourism and catering industries.

The robust fixed asset investment expected this year will benefit heavy industries such as cement and steel, Wang said.

"The impact of SARS on the whole economy will be less than 1 percentage point," he said.

Wang Jian, a senior researcher with the China Marco-Economic Society, said as long as China takes effective measures to cure SARS patients and prevent the disease from spreading further, the country will be capable of maintaining its economic growth advantages.

"People should not exaggerate the negative impact of SARS to create unnecessary concern," he said.

World Bank East Asia and Pacific Vice-President Jemal-ud-din Kassum said although there is a great deal of uncertainty as to how large the SARS crisis will be in the end, it was creating temporary shock.

China is still generally expected to grow at a robust rate, he said.

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