China's economy grew at the fastest pace in seven years as factories increased production to meet surging export demand. The government said growth may slow as a deadly virus cools consumer spending and damps tourism.
Gross domestic product grew a higher-than-expected 9.9 percent in the first quarter from a year ago to 2.36 trillion yuan (US$285 billion), the National Bureau of Statistics said in a statement. Retail sales rose 9.2 percent to 1.11 trillion yuan.
"Booming exports are encouraging companies to invest. The economy is very strong, supported by strong demand and foreign investment," said Huang Yiping, an economist with Citigroup Inc in Hong Kong.
Companies such as Nokia Oyj and Samsung Electronics Co are expanding their factories in China and the country's production is rising at a record pace as factories make more mobile phones, TVs and toys for the US, Europe and Japan.
Increasingly, these products are also being sold to China's growing middle class in cities such as Beijing and Shanghai. The per capita disposable income of China's urban residents in the first quarter rose 8.4 percent to 2,355 yuan.
Still, private consumption, which makes up half of the economy, will likely slow in the current quarter as consumers put off travel plans and trips to crowded restaurants for fear of contracting severe acute respiratory syndrome, or SARS, which has killed more people in China than anywhere else.
SARS "will affect consumption, namely tourism, catering, transportation and hotels," Yao Jingyuan, chief economist for the National Statistics Bureau, said. "SARS will surely have an impact on second-quarter GDP, but it's hard to say by how much."
China has reported 1,445 cases of the killer respiratory disease with 65 deaths, about two-fifths of the world total. The government says the disease will also affect the tourism industry, which generated US$66 billion in revenue last year, equal to about 5 percent of gross domestic product.
Attendance at the country's largest trade fair, China Export Commodities Fair, held in the capital of Guangdong province is down this year. CYTS Tours Inc, the China's No. 2 travel agent, says bookings from the US, China's second-biggest tourist market, have fallen by more than half in the past month.
During the first three months of this year, industrial production grew 17 percent, foreign direct investment increased 57 percent, fixed-asset investment, about three-quarters coming from the government or government-controlled companies, grew by 28 percent and exports surged by a third.
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