China: Economy Grew by 10.2 Percent in 1Q
BEIJING — China’s sizzling economy grew by 10.2 percent in the first quarter from the same period last year, overshooting its official target, but inflation stayed low and growth didn’t appear to be dangerously fast, the government said Thursday.Industrial output, driven by booming exports, soared by 16.7 percent while retail sales also increased, the National Bureau of Statistics reported. It said consumer prices rose just 1.2 percent.
The quarterly growth figure was first disclosed Sunday by President Hu Jintao, who is now visiting the United States, in a meeting with a visiting Taiwanese opposition leader.
Chinese leaders have warned that excessively rapid growth could ignite inflation and cause financial problems. But they have avoided raising interest rates to cool off the economy, trying instead to cut investment in energy-guzzling factories and real estate while maintaining high growth to reduce poverty.
The government’s growth target this year is 8 percent, but forecasts by the World Bank and other experts range as high as 9.5 percent. China’s economy expanded by 9.9 percent last year.
The latest figure “looks a little bit bad because it was 0.3 percentage points higher than in 2005,” Zheng Jingping, a spokesman for the statistics bureau, said at a news conference.
But “it’s really within the potential range for growth” and in line with previous years, Zheng said.
“We still need to keep fairly fast economic growth,” he said. “We want to solve the poverty problem in rural areas.”
Total economic output from January through March totaled 4.33 trillion yuan ($540 billion), according to Zheng.
Investment in factories, roads and other fixed assets rose by 27.7 percent from January to March, the bureau said, suggesting that official efforts to reduce such spending were only partially effective.
Leaders have warned that excess investment could leave China with a glut of unneeded factories, luxury apartments and other projects, causing problems for banks that finance them.
The Cabinet called last week for new curbs to require banks to screen borrowers more strictly.
“We need to control the availability of credit,” said Zheng, the statistics spokesman.
Zheng said the government wants to promote more efficient growth, reduce energy consumption and clean up the environment — themes that Chinese leaders are sounding with increasing urgency.
“We need to attach importance to the sustainability of economic growth,” Zheng said. “We also need a better use of resources and to protect the environment.”
Also Thursday, the government’s Xinhua News Agency quoted an official as saying Beijing will abandon quotas on how much foreign exchange its companies can obtain in order to invest abroad — a step that could sharply increase China’s foreign investments.
The report comes amid a surge in foreign expansion by Chinese companies and pressure on Beijing from its trading partners to ease strict currency controls.
“In the future, if any firms win approval to invest overseas, they could freely buy foreign currencies needed for the investment from banks,” Xinhua quoted Guan Tao, an official at the State Administration of Foreign Exchange, as saying.
It didn’t say when the step would take effect.
–Source: Newsvine
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