Fri, Jan 21, 2011 page10

• China’s economic growth quickens

  ‘ALARMING’: The country’s GDP grew 10.3% last year, to US$6.04 trillion, the most in three years, and analysts expect inflation to peak as high as 6% in the first half

  • Bloomberg
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  China’s growth accelerated to 9.8 percent in the fourth quarter as industrial production and retail sales picked up, driving stocks lower on speculation that an interest-rate increase may be imminent.

  The expansion exceeded the 9.4 percent median estimate in a Bloomberg News survey of 22 economists and compared with a 9.6 percent annual gain in the previous three months, a statistics bureau report showed yesterday.

  Consumer-price inflation eased to 4.6 percent last month. Citigroup Inc and Credit Suisse Group AG say inflation may peak at as much as 6 percent in the first half.

  

  Workers install steel frames yesterday at a construction site of a theater in Taiyuan, Shanxi Province, China. The nation finished last year with a bang, its growth soaring past expectations while inflation slowed less than expected, numbers that could prod the government to ratchet up its easy-does-it approach to policy tightening.

  Photo: REUTERS

  “If the economy keeps growing at the current pace, inflation will remain alarming,” said Liu Li-gang (劉利剛), a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd. Besides raising lenders’ reserve requirements, the central bank should boost benchmark rates, he said.

  China may also allow more gains in the yuan to contain consumer prices and ease trade tensions, a topic on the agenda of Chinese President Hu Jintao’s (胡錦濤) meetings in the US this week.

  In Tokyo, Japanese government minister Kaoru Yosano said his country was probably overtaken as the second-largest economy last year, after yesterday’s report showed China’s GDP totaled 39.8 trillion yuan (US$6.04 trillion).

  The Shanghai Composite Index tumbled 2.9 percent to close at a four-month low. The measure has fallen 15 percent in the past year on concern at the effects of monetary tightening. Non-deliverable yuan forwards traded at 6.4780, indicating that the currency may appreciate about 1.7 percent against the dollar in the next 12 months.

  China’s economy expanded 10.3 percent last year, the fastest pace in three years, the statistics bureau report showed.

  That compared with growth of 9.2 percent in 2009. The nation’s standing as the No. 2 economy may be confirmed on Feb. 14 when Japan reports GDP for the fourth quarter.

  Bank of America-Merrill Lynch estimated yesterday that, using average full-year exchange rates, China’s GDP last year was about US$380 billion more than Japan’s.

  Last month’s inflation compared with November’s 5.1 percent annual pace, which was the fastest in more than two years. The rate slowed largely because of a higher year-earlier base for comparison and may “spike” this month ahead of the Lunar New Year holiday, Merrill economist Lu Ting said.

  China aims to hold inflation at 4 percent for the full year, state television reported last month, citing the National Development and Reform Commission, the economic planning agency.

  Inflation of even that level is “serious” in China, according to Ma Jun (馬駿), Deutsche Bank AG’s chief China economist.

  The central bank has raised -reserve ratios for the largest banks to 19 percent, excluding any extra requirements for individual lenders. Still, local-currency lending has already exceeded 1 trillion yuan in the year to date, the 21st Century Business Herald reported, citing an unidentified person familiar with the matter. Lending was 481 billion yuan last month.
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