Shanghai's industrial production grew for a second consecutive month in July, reflecting a continued rebound in the city's economy following a decline for the previous seven months.

The industrial output rose 2.1 percent from a year earlier to 198 billion yuan (US$28.9 billion) last month, the Shanghai Statistics Bureau said yesterday.

July's increase followed a gain of 2.4 percent in June, after posting declines of 2.1 percent in May and 5.2 percent in April.

"A positive industrial output growth is especially encouraging as the manufacturing sector is still the foundation of the economy," said Wang Zehua, a bureau analyst. "The result in July shows the stimulus package and a relatively easy monetary policy have started to take effect and helped manufacturers overcome the difficulties during the global economic meltdown."

Shanghai's gross domestic product gained 5.6 percent on an annual basis in the first six months, rebounding from a record low of 3.1 percent in the first quarter.

Shanghai has targeted a growth of 9 percent for 2009, and Mayor Han Zheng said in July he was confident the city can achieve the goal.

Li Maoyu, an analyst at Changjiang Securities Co, said: "Falling exports still pose a negative influence over the city's industrial sector, but they have been countered by buoyant domestic demand."

Shanghai's exports fell 22.3 percent year on year in the first half of the year, but the pace has moderated to 14.8 percent in June, according to Shanghai Customs.

The city's six key industries - electronics, auto making, fine steel, petrochemical processing, machinery equipment and biomedicine - posted a combined output of 128.6 billion yuan last month, up 7.9 percent from a year earlier.

The production of vehicles jumped 71.5 percent to 22.1 billion yuan, thanks to rising demand after the central government provided subsidies to new car buyers.

Petrochemical processing was the only sector which declined among the six industries when its output fell 6.9 percent to 21.8 billion yuan.

China's key economic data is expected to be released today.

(Shanghai Daily August 11, 2009)