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- Economy up 11.1% on strong exports
Date: 20-Apr-2007 Sources: (Shenzhen Daily)
THE country's economy grew at a faster than expected 11.1 percent in the first quarter from a year earlier, powered by exports that have inflamed trade tensions and increased the risk of overheating.
Growth accelerated from 10.4 percent the previous quarter, the National Bureau of Statistics said in Beijing on Thursday, and beat the 10.4 percent median estimate of 24 economists. The benchmark stock index fell 4.7 percent before the release on speculation the pace of expansion may prompt higher interest rates.
The government, concerned the boom may turn to bust, may raise rates or allow the yuan to appreciate faster to curb runaway investment in property, factories and the stock market. The China Banking Regulatory Commission Thursday cautioned that a trade surplus that almost doubled to US$46.4 billion in the first quarter may trigger a rebound in bad loans.
'Growth has been driven by continuing strength in investment and continuing strength in politically sensitive exports,'' said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong.
'What China really needs to do is to cool profits and the easiest way to do that would be to allow the yuan to appreciate at a faster rate,'' Maguire said.
The yuan stayed stronger at 7.7175 against the U.S. dollar Thursday. After the release, Goldman Sachs Group Inc. forecast the currency will gain 9 percent in 2008.
Consumer prices climbed 3.3 percent in March versus a central bank target of 3 percent for 2007. That's the highest inflation rate in more than two years. Food accounted for most of the increase, economists said.
Urban investment in factories and real estate jumped 25.3 percent in the first quarter from a year earlier, accelerating from 24.5 percent for all of 2006. The increase was 29.8 percent in the same period last year.
China's economic structure is irrational, the statistics bureau said in Thursday's statement.
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