CHINA'S industrial production maintained steady growth in May despite the earthquake and increasing costs, the National Bureau of Statistics said yesterday.

Output rose 16 percent from a year earlier last month, compared to 15.7 percent in April and 17.8 percent in March. Combined growth in the first five months settled at 16.3 percent, down from 18.5 percent for the whole of 2007.

"Industrial production was not much affected by the strong earthquake in May, thanks to the small proportion of the output in the affected areas of the national's total," said Li Maoyu, an analyst with the Changjiang Securities Co.

The May 12 earthquake in Sichuan Province halted almost all industrial production in the quake-hit areas. But since the combined output of the 11 counties and cities devastated by the quake only accounted for 0.17 percent of the total national output, its overall influence was limited.

"Looking into the future, the demand for reconstruction may give a boost to the industrial production which was under pressure because of weakening exports and higher producer prices," Li added.

The Producer Price Index, the main gauge of factory-gate inflation, rose 8.2 percent in May to reach a record high in more than three years. But it did not fundamentally changed investors' confidence in China's economy, analysts said.

Exports in May increased 28.1 percent to US$120.5 billion, up from the growth of 21.8 percent in April. However, many small exporters of narrow-profit products, such as textiles, still suffered from the shrinking demand abroad, when the world economy was in a downturn, and the stronger yuan. The foreign direct investment in China rose 37.94 percent in May, decreasing from the peak in January when FDI posted a 110-percent hike, which may work to slow the pace of the industrial production, analysts said.

Last month, the output of coal, crude oil and electricity increased 18.5 percent, 1.8 percent and 11.8 percent respectively. Vehicle production jumped 21.7 percent to 895,000 units.

The output of the textile industry, the one most affected by the weakening demand for exports, also managed to gain 12.1 percent.(Shanghai Daily)