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Wed, Jan 26, 2005 - Page 12 News List

China's growth exceeds expectations

2004 DATA The economy expanded at an even faster pace last year than in 2003 and Beijing says further measures to tighten control of land use and credit are likely


China's booming economy grew even faster last year, expanding at 9.5 percent after 9.3 percent the previous year in an indication that more tightening measures could be in store, official data showed yesterday.

The fourth quarter alone showed growth steaming ahead at 9.5 percent year-on-year, up from 9.1 percent in the previous three months despite Beijing's efforts to cool the economy.

"The acceleration of economic growth in the last three months of the year was due to rapid growth in agriculture, catering, transportation and other service sectors," said National Bureau of Statistics (NBS) director Li Deshui.

The nation's full-year GDP came to 13.65 trillion yuan (US$1.65 trillion) as exports continued to drive expansion.

"The data is stronger than expected in terms of the overall GDP number," said Robert Subbaraman, economist at Lehman Brothers.

Most economists had been predicting quarterly GDP of less than 9 percent and official statisticians forecast growth of 8.5 percent.

"It's very strong data. There is no sign of a slowdown in 2005," said Tim Condon, economist at ING Barings.

Despite the figures suggesting Beijing will have to do more to prevent the economy from running away, Li said that "tangible" results in cementing macro-controls and curbing "unhealthy and unstable" factors had been achieved.

"National economic development will maintain the good momentum of stable and rapid growth with a mild increase in prices as long as we follow the guiding principle of the scientific concepts of economic and social development set forth by the central government," he said.

China began last year amid serious worries that the economy was dangerously overheated, with easy credit fuelling a production boom and soaring investment in government infrastructure products.

Inflation rose at an alarming rate, hitting a peak of 5.3 percent in July and August, as inventories of cars and production steel and cement rose sharply.

Fixed asset investment, an indication of how much the government is spending on major infrastructure projects, hit 10-year highs in the January to March period, growing 43 percent but efforts now to cool overheated industries such as real estate, construction and autos seem to be taking effect.

China has made clear that ensuring the economy remains on a more even keel this year is crucial and Li said that further tightening measures were likely.

"We need to further enhance and improve macro-regulatory control measures and they should have relativelty tight control of land use and credit," he said.

"We should keep an eye on the rebound in the high growth of fixed assets investment," he said.

Last month Beijing said a prudent fiscal policy, and stable economic growth with an emphasis on efficiency and preventing overheating, were the overarching goals for this year.

China's dizzying fixed-asset investment slowed slightly last year to 25.8 percent compared with 26.7 percent in 2003 and analysts said the amount of money the government was spending on large infrastructure projects should continue to fall.

Among other figures released yesterday, China's industrial output grew 11.5 percent last year compared to 17 percent in 2003.

Consumer prices continued to gain last year, rising to 3.9 percent, some 2.7 percentage points more than the previous year, driven by soaring food prices, the data showed, but at least off the mid-year highs.

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