The National Bureau of Statistics (NBS) has downplayed the charges of inaccurate economic data and said the published figures are consistent with economic trends.
The International Energy Agency (IEA) had questioned the reliability of China's economic data in its latest report on the global oil market released on May 14, saying the first quarter GDP growth, didn't tally with falling oil demand, Dow Jones reported.
"The viewpoint is groundless," the National Bureau of Statistics (NBS) said in an interview posted on its website yesterday. "It made a mistake to oversimplify the correlation between economic growth and energy use."
China's economy expanded 6.1 percent from a year earlier in the first quarter, according to the statistics bureau. That compared with a 4.02 percent decline in China's first quarter electricity consumption.
Some economists believe the figures are contradictory, as they believe shrinking electricity consumption indicates weakness of the secondary sector, which makes up about half of China GDP growth.
The IEA estimated China's oil demand also declined 3.5 percent during the period. It said "one would have expected stronger, positive oil demand growth commensurate with the reported economic resilience, unless income elasticities had drastically changed."
The NBS said faster growth of the service sector, which requires less energy, partly explains the lukewarm economic expansion and the declining electricity use.
The nation's service industry expanded 7.4 percent in the first quarter, compared with 5.3 percent for the industrial sector. Services now accounts for 44.3 percent of the overall economy, while the industrial sector is around 44.1 percent.
The NBS also said some energy-intensive industries suffered a more drastic slowdown in the first quarter.
For example, six energy-intensive industries saw their electricity use dropping 3.7 percent in the first quarter, compared with 2.6 percent for the sector's average.
"Some investors have suggested that using physical indicators such as electricity consumption may be a more reliable tool to gauge the real pace of economic recovery," said Wang Tao, head of China Economic Research, UBS Securities.
"Due to the large and uneven fluctuations of industrial activity across different sectors, power consumption is often not a good indicator of the overall picture,"
Wang said the huge slowdown of the energy-intensive sector is one of the factors contributing to the decline in energy use.
Electricity production, ferrous metals, non-ferrous metals, and the chemical sectors were among the hardest hit by the economic downturn. They accounted for 42 percent of the total electricity consumption, but account for only 11 percent of the GDP, said Wang.
"We see a weak electricity consumption coexisting with a stronger growth in industrial production and GDP in 2009." Wang said.
The NBS said other economies have also experienced periods when the economy expanded despite falling energy use.
It said the US economy grew 0.8 percent in 2008 while its electricity use dropped 3.6 percent. Japan's GDP growth reached 1.8 percent in 2003, while its electricity consumption shrunk 1.3 percent during the period.
Source: China Daily