China's economy roars ahead, clampdown expected
Friday, 20 July 2007
BEIJING, July 19 (AFP): China's economy expanded at a roaring 11.9 per cent in the second quarter, official data showed today, 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 per cent, as inflation picked up sharply to a worrying 4.4 per cent 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 dollars) 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 per cent.
The last time China's economy neared this pace was in 1994 when the full year GDP hit 13.1 per cent.
Thusday'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 per cent from the original 10.7 per cent.
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 per cent in the first six months of the year and jumped to 4.4 per cent in June from 3.4 per cent in May to be even further above the government's full-year target of 3.0 per cent.
China's factories also continued to speed up production, with industrial output up 18.5 per cent in the first half of 2007.
Fixed asset investment, a key measure of mostly government spending in infrastructure, rose 25.9 per cent 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 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.
The much faster-than-expected pace lifted China's first half growth to 11.5 per cent, as inflation picked up sharply to a worrying 4.4 per cent 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 dollars) 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 per cent.
The last time China's economy neared this pace was in 1994 when the full year GDP hit 13.1 per cent.
Thusday'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 per cent from the original 10.7 per cent.
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 per cent in the first six months of the year and jumped to 4.4 per cent in June from 3.4 per cent in May to be even further above the government's full-year target of 3.0 per cent.
China's factories also continued to speed up production, with industrial output up 18.5 per cent in the first half of 2007.
Fixed asset investment, a key measure of mostly government spending in infrastructure, rose 25.9 per cent 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 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.