China’s economy grew 7.9 percent in the second quarter of this year, the government said yesterday, in a stunning turnaround for the Asian powerhouse that offered some hope for the rest of the world.
With help from US$580 billion in government pump priming, the world’s third-biggest economy picked up pace again after the global economic crisis dragged growth down to 6.1 percent in the first quarter.
“The economy is rebounding and the strength of the recovery is increasing,” National Bureau Spokesman Li Xiaochao (李曉超) said at a media briefing to release the data.
China’s GDP grew by 7.1 percent in the first half of the year compared with the same period a year earlier, the bureau said.
This put China back on track to achieve its goal of 8 percent growth for the year, despite the financial crisis hitting its crucial export sector particularly hard.
Analysts said the rebound in China would offer a boost of confidence for the global economy as it struggles out of the worst economic crisis since the Great Depression of the 1930s.
However, analysts cautioned that immediate and direct benefits would be limited to countries that import heavily into China, chiefly resource-rich exporters and neighboring nations in Asia.
To fight the downturn, the government began implementing a 4 trillion yuan (US$580 billion) stimulus package from November last year.
“There are many difficulties and challenges existing in the current national economic performance. The base for recovery is still weak. The momentum for picking up is unstable,” Li said.
Economists also warned that China’s rebound was unbalanced, with the export sector still struggling while massive bank lending had fueled the potential for asset price bubbles and inflation.
“Although private sector investment has picked up, growth still relies heavily on the central government’s expansionary policies,” said Lu Zhengwei (魯政委), a Shanghai-based economist with the Industrial Bank.
Nevertheless, Lu and other analysts said China’s economy would likely grow by around 8 percent growth this year, in line with the government’s target.
The figure is generally seen as the minimum growth needed to create enough jobs and prevent major social unrest in the nation of 1.3 billion people.