Others News
- Economy growth fastest in 11 years
Date: 26-Jan-2007 Sources: (Shenzhen Daily)
THE country's economy rose 10.7 percent in 2006, the government said Thursday, reporting an 11-year high that put the Asian giant well on track to surpass Germany as the world's third-biggest next year.
Growth in the world's fourth-largest economy topped the 10.4 percent rate in 2005 and was the highest level since 1995, when China grew 10.9 percent, the National Bureau of Statistics told a briefing in Beijing.
'In 2006, the national economy maintained steady and fast growth,'said Xie Fuzhan, the bureau's commissioner, emphasizing he did not believe there had been an overheating.
The growth rate was also slightly higher than the 10.5 percent that officials had indicated in recent weeks.
China's total economic output came to 20.9 trillion yuan (US$2.69 trillion) in 2006.
This makes it possible that the economic world rankings will soon have to be changed and that China could overtake Germany for the third spot some time in 2008.
'It could happen if China maintains growth of 8 to 10 percent while growth in the Euro area hovers around 2 percent,'Sun Mingchun, a Hong Kong-based economist with Lehman Brothers, said.
'China's economy is continuing to grow fast and there is good momentum that can be maintained. It is hard to say when exactly China will overtake Germany, but it is only a matter of time,'said Zhou Keyu of Guotai Junan Securities.
But underneath the headline figures suggesting continued high growth were 'uncertainties in world economic performance and some problems with the domestic economy,'Xie warned.
Growth in China in 2006 was fueled mostly by investment and exports, leading to some concerns that the temperature might be too hot in the Asian giant and triggering a series of government measures to cool things down.
'These policies and measures proved to be effective and helped economic development avoid moving from speedy growth to overheating,'Xie told reporters.
Fixed asset investment, the main indicator of State-funded spending on new productive capacity, rose 24 percent last year, fueled by the ample liquidity available in the Chinese economy.
The figure was lower than the 25.7 percent growth registered in 2005, but still well above an 18 percent growth target for fixed assets investment set for last year.
Industrial output expanded 12.5 percent in 2006, boosted by massive investment in new plant and equipment in recent years and booming exports, outstripping output in 2005 which climbed by 11.4 percent.
Retail sales, a main gauge of consumer spending and sentiment, increased 13.7 percent in 2006, while consumer price inflation remained moderate at just 1.5 percent.
This compares with 2005 when retail sales grew by 12.9 percent and inflation registered 1.8 percent.
However, the consumer price index appeared to spike in December, rising 2.8 percent compared with the same month a year earlier.
'For the globe, some will begin to worry that China's exports will go inflationary,'Stephen Green, an economist with Standard Chartered said in a research note.
This would have big implications for institutions such as the U.S. Federal Reserve whose main concern is inflation, he argued.
The National Bureau of Statistics confirmed in its briefing that China's trade surplus reached a record US$177.5 billion in 2006, up 74 percent from 2005.
Meanwhile, Xie cautioned over some 'problems?in the domestic economy, including per capita net income in rural areas which was only up 7.4 percent in 2006 to 3,587 yuan.
Urban per capita disposal income rose 12.1 percent in 2006 to 11,759 yuan, Xie said.
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