China's economy grew by 7.9pc between April and June, confirming that the country has recovered from the financial crisis with astonishing speed.
By Malcolm Moore in ShanghaiPublished: 6:47AM BST 16 Jul 2009
Stimulus package boosts growth - Chinese women walk past a shop displaying a poster of women have their hair styled in Beijing, China. Photo: AP
The reading, which surprised even the researchers at China's central bank, leaves the country easily on course to hit its target of 8pc annual gross domestic product growth.
Yu Song, an economist at Goldman Sachs, said GDP could exceed Goldman's 8.3pc forecast for 2009. "Actual growth has been much stronger [than expected]. If we simply keep our previous assumptions for the next two quarters, the implied annual GDP growth will reach 8.9pc," he said.
China only issues statistics for year-on-year GDP growth, but some economists believe the acceleration between the first and second quarters may have been as high as 15pc. The rebound in GDP snaps a two-year run of progressively slower growth.
GDP growth was 6.1pc in the first quarter, but a surge in bank lending and the government's 4 trillion yuan (£356bn) fiscal stimulus package has succeeded in turning the economy around. China is currently printing almost three times as much new money as the United States to fuel the credit boom.
The Shanghai stock market's benchmark index has gained 75pc this year while factory output, commodity imports and electricity production, a key sign of industrial activity, have all improved. "The strong acceleration in overall activity growth is unmistakable," said Mr Yu.
Zhang Jianhua, head of the research bureau at the People's Bank of China is predicting 8pc growth in the third quarter and 9pc in the final three months of the year.
However, a spokesman for the Statistics bureau said the impressive numbers could not obscure some problems with the economy.
"The difficulties and challenges in the current economic development are still numerous. The basis of the rebound of the people's economy is not stable. Growth momentum is unstable. The recovery pattern is unbalanced and thus there are still uncertain and volatile factors in the recovery process," he said.
Wen Jiabao, the Chinese prime minister, told a meeting of economists last week that the government continues to be wary. "An improving trend in the economy does not mean that this difficult period is over," he said, pledging to continue the current stimulus policies and undertake structural reforms.
Ben Simpendorfer, an economist at the Royal Bank of Scotland, said: "The important message here is that while the pace of growth is accelerating, the quality is deteriorating. Growth is too reliant on public investment and residential investment. It's not sustainable."
China, the biggest contributor to global growth, overtook Japan as the world’s second-largest stock market by value yesterday after the stimulus package spurred record lending and boosted share prices.
China’s economy is the only one of the world’s 10 biggest still expanding.
The nation’s foreign-exchange reserves rose to a record $2.132 trillion last quarter as investors abroad pumped money into stocks and property, a central bank report showed yesterday.
Emerging economies, led by China, are set to regain growth momentum in the remainder of this year, helping the world economy to recover from the worst slump since World War II, the International Monetary Fund said in a July 8 report.
China accounted for a third of global growth last year, according to IMF data.
By Malcolm Moore in ShanghaiPublished: 6:47AM BST 16 Jul 2009
Stimulus package boosts growth - Chinese women walk past a shop displaying a poster of women have their hair styled in Beijing, China. Photo: AP
The reading, which surprised even the researchers at China's central bank, leaves the country easily on course to hit its target of 8pc annual gross domestic product growth.
Yu Song, an economist at Goldman Sachs, said GDP could exceed Goldman's 8.3pc forecast for 2009. "Actual growth has been much stronger [than expected]. If we simply keep our previous assumptions for the next two quarters, the implied annual GDP growth will reach 8.9pc," he said.
China only issues statistics for year-on-year GDP growth, but some economists believe the acceleration between the first and second quarters may have been as high as 15pc. The rebound in GDP snaps a two-year run of progressively slower growth.
GDP growth was 6.1pc in the first quarter, but a surge in bank lending and the government's 4 trillion yuan (£356bn) fiscal stimulus package has succeeded in turning the economy around. China is currently printing almost three times as much new money as the United States to fuel the credit boom.
The Shanghai stock market's benchmark index has gained 75pc this year while factory output, commodity imports and electricity production, a key sign of industrial activity, have all improved. "The strong acceleration in overall activity growth is unmistakable," said Mr Yu.
Zhang Jianhua, head of the research bureau at the People's Bank of China is predicting 8pc growth in the third quarter and 9pc in the final three months of the year.
However, a spokesman for the Statistics bureau said the impressive numbers could not obscure some problems with the economy.
"The difficulties and challenges in the current economic development are still numerous. The basis of the rebound of the people's economy is not stable. Growth momentum is unstable. The recovery pattern is unbalanced and thus there are still uncertain and volatile factors in the recovery process," he said.
Wen Jiabao, the Chinese prime minister, told a meeting of economists last week that the government continues to be wary. "An improving trend in the economy does not mean that this difficult period is over," he said, pledging to continue the current stimulus policies and undertake structural reforms.
Ben Simpendorfer, an economist at the Royal Bank of Scotland, said: "The important message here is that while the pace of growth is accelerating, the quality is deteriorating. Growth is too reliant on public investment and residential investment. It's not sustainable."
China, the biggest contributor to global growth, overtook Japan as the world’s second-largest stock market by value yesterday after the stimulus package spurred record lending and boosted share prices.
China’s economy is the only one of the world’s 10 biggest still expanding.
The nation’s foreign-exchange reserves rose to a record $2.132 trillion last quarter as investors abroad pumped money into stocks and property, a central bank report showed yesterday.
Emerging economies, led by China, are set to regain growth momentum in the remainder of this year, helping the world economy to recover from the worst slump since World War II, the International Monetary Fund said in a July 8 report.
China accounted for a third of global growth last year, according to IMF data.
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