Houston Community News >> China's Economy Roars Ahead
7/19/2007 BEIJING (AFP) -
China's economy expanded at a roaring 11.9 percent in the second quarter,
official data showed Thursday, prompting warnings that the government will clamp
down hard to stop serious overheating.
The much faster-than-expected pace lifted China's first half growth to 11.5
percent, as inflation picked up sharply to a worrying 4.4 percent in June, the
National Bureau of Statistics said.
At the current rate of growth, China's gross domestic product (GDP) is widely
expected to overtake Germany's as the world's third-largest by the end of this
year, having already topped Britain and France in 2005.
China's economy was worth 10.68 trillion yuan ($1.4 trillion) in the first half,
while World Bank figures show Germany's GDP was 2.9 trillion dollars at the end
of 2006.
Bureau spokesman Li Xiaochao told reporters that a series of cooling measures
had already had some impact but the government needed to do more.
"We will continue to strengthen and improve macro-control measures," Li said at
a press briefing to announce the figures.
"We will continue to enhance the adjustment of the industrial structure to
change the growth pattern and to enable the economy to grow healthily and
quickly."
Li identified a range of "outstanding problems" in the economy.
"(These are) the imbalance in international trade, inflation in food prices and
the pressure on energy conservation and pollution reduction," he said.
China announced last week that the trade surplus for the first six months of the
year had soared to 112.5 billion dollars, which the bureau confirmed.
Thursday's data was much stronger than expected, with most forecasts for first
half and second quarter growth put at around 11 percent.
The last time China's economy neared this pace was in 1994 when the full year
GDP hit 13.1 percent.
Thursday's figures also came off a higher base than originally thought after
China last week revised up last year's growth number to 11.1 percent from the
original 10.7 percent.
This meant China's economy was last year worth 21.09 trillion yuan (2.65
trillion dollars) in 2006.
Of particular worry is China inflation's rate, which the bureau said rose 3.2
percent in the first six months of the year and jumped to 4.4 percent in June
from 3.4 percent in May to be even further above the government's full-year
target of 3.0 percent.
China's factories also continued to speed up production, with industrial output
up 18.5 percent in the first half of 2007.
Fixed asset investment, a key measure of mostly government spending in
infrastructure, rose 25.9 percent in the six months.
Li Huiyong, an economist with Shenyin Wanguo Securities based in Shanghai, said
that all signs pointed to overheating and the government would be forced to take
decisive measures to cool the economy.
"We can see the economy is overheated overall. We expect the government will
issue new policies soon," Li said.
Li and other economists said one key measure that would likely be announced very
soon was an interest rate hike -- which would be the third so far this year.
A key Chinese parliamentary committee warned only on Monday that the economy was
in danger of overheating amid rising inflationary pressure.
"The economic overheating trend is even clearer. Inflationary pressure continues
to increase, especially food and house prices," the committee was quoted in the
state-run press as saying.
(Contributed by AFP)