June 16 (Bloomberg) -- China's industrial-production growth accelerated on rising exports, signaling that the world's fourth-biggest economy is weathering a global slowdown.

Output rose 16 percent in May from a year earlier after gaining 15.7 percent in April, the statistics bureau said today. That matched the median estimate of 22 economists surveyed by Bloomberg News.

Overseas shipments surged last month and retail-sales growth was close to the highest in nine years, keeping factories busy even as the deadliest earthquake in 32 years disrupted output in Sichuan province. The shortening of a weeklong May holiday to a three-day break boosted production.

``Exports saw solid growth in May and it was the same for industrial production,'' said Wang Qian, an economist with JPMorgan Chase & Co. in Hong Kong. ``The export sector is going to face stronger headwinds going forward.''

The yuan traded at 6.9029 versus the dollar as of 3:29 p.m. in Shanghai, after closing at 6.9018 on June 13.

Chinese output growth is more than double the pace in India, the world's second-fastest growing major economy. Production in that country rose 7 percent in April from a year earlier.

Global growth will slow to 1.8 percent this year, the weakest pace since 2002, the Organization for Economic Cooperation and Development said this month. The figure is for the OECD's 30 members. China's economy will ease to a 10 percent expansion after growing 11.9 percent in 2007, it said.

Quake Reconstruction

Sichuan's small role in China's manufacturing limited the May 12 disaster's effect on production. Quake reconstruction work is boosting output of some products, with state-owned Baosteel Group Corp. making more steel sheets for housing.

Raw-coal production rose 18.5 percent in May from a year earlier after gaining 13.9 percent in April. Crude-oil output climbed 1.8 percent after increasing 0.5 percent.

Strength in production, retail sales and exports may encourage the central bank to implement the ``forceful measures'' that it said last week were needed to stop prices from rising excessively.

``With export and domestic consumption holding up, China's policy makers are more concerned about inflation than economic growth,'' said Paul Tang, chief economist at Bank of East Asia Ltd. in Hong Kong.

No. 1 Challenge

Rising prices are the economy's biggest challenge in 2008, the government says. Producer prices jumped 8.2 percent last month, the largest increase in more than three years, signaling pressure for inflation to rebound after easing from close to a 12-year high. Consumer prices rose 7.7 percent in May.

The central bank has ordered lenders to set aside a record 17.5 percent of deposits as reserves from June 25 to try to prevent excess cash in the financial system from fueling inflation. It has also allowed the yuan to gain 5.8 percent versus the dollar this year.

China's export growth accelerated to 28.1 percent in May from a year earlier. Retail sales gained 21.6 percent.

For the first five months, industrial production climbed 16.3 percent from a year earlier, the statistics bureau said. China's economy expanded 10.6 percent in the first quarter from a year earlier.

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net

Last Updated: June 16, 2008 03:40 EDT