Economy gallops by 11.9% in first quarter

10:10, April 15, 2010      

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China's economy has got rid of the global Great Recession impact and entered a cycle of heated growth. On Thursday Beijing's official statistical office said the country's GDP for the first three months this year vaulted to 11.9 percent over last year, a feat stunning most observers.

The galloping growth rate for the first quarter, following a fairly solid rise of 10.7 percent recorded for October-December quarter, has many observers worrying about the health of the world's third largest economy. In China, complaints are getting louder that urban housing prices are already out of control, and economists have asked for urgent tightening measures from the central bank.

The National Bureau of Statistics also reported that the consumer price index (CPI), a major gauge of inflation, averaged at 2.2 percent for the first quarter. The index for the month of March is 2.4 percent rise, as compared as 2.7 percent for February.

In the first quarter, investments in urban housing projects hit 659.4 billion yuan, rising 35.1 percent over the same period last year, the bureau said.

Andy Xie, an independent economist who was once Morgan Stanley's chief Asian economist, said in a blog Wednesday that China's frenzied property market now will prove to be "the biggest bubble in the history of finance". He suggested China's central bank raise the interest rates in a prompt manner to pierce the perilous bubble.

Xie warned that if the ballooning asset bubble is not curbed, an eventual burst could mean a serious crisis for the economy in the coming two years. Xie even recommended China increase interest rates steadily if it wants to achieve a soft landing of the over-heated economy—if possible, by 2 percentage points in 2010 and another 3 percentage points in 2011.

The data released by the bureau suggested Chinese leaders are succeeding in their effort to keep stimulus-led growth high while preventing inflation from spiking up, the Associated Press said in a report Thursday. Analysts were closely watching Thursday's data to see whether interest rate hikes or more drastic action was required to prevent overheating, it said.

The bureau said that China's retail consumption in the first three months this year posted a strong rise of 17.9 percent, 2.9 percent higher than the same period of 2009. The news has verified China's growing power of domestic consumption, which analysts say will continue to buoy economic recovery of China's neighbors and all trading partners.

People's Daily Online


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