Chinese growth exceeds expectations

China's economy has grown by an unexpectedly high 9.5% in the first three months of this year from a year earlier.

    The government fears fast growth will cause inflation

    The increase exceeded the expectations of analysts, who had predicted that efforts by Beijing over the past year to slow growth would have a bigger impact.

     

    The government has cautioned repeatedly that surging growth could ignite inflation and harm China's fragile banks.

     

    The economy grew by 9.5% in the fourth quarter of 2004 from a year earlier.

     

    The government's official target for growth is 8% a year.

     

    Surge

     

    Leading the first-quarter surge was a 22.8% jump in investment in factories, construction and other "fixed assets", to 1.1 trillion yuan ($133 billion), the government said.

     

    "Investment in fixed assets is still overheated," Zheng Jingping, spokesman for the National Bureau of Statistics, told a news conference in Beijing on Wednesday.

     

    Zheng said the government needed to tighten controls on land use and loans for new construction, warning that too much investment pushes up prices for raw materials such as crude oil and iron ore.

     

    "Investment in fixed assets is still overheated"

    Zheng Jingping

    ,


    National Bureau of Statistics

    Speculation in real estate also needs to be constrained, Zheng said. He said China should learn from developed countries that levy property taxes and transaction fees.

     

    While investment growth was far slower than the 43% jump recorded in the first quarter of last year, it was still "at a very high level", he said.

     

    "The task of macroeconomic regulation and control is still arduous," he said.

     

    Manufacturing

     

    Manufacturing and consumer spending also registered double-digit growth. Industrial output was up 16.2% at 1.4 trillion yuan ($169 billion).

     

    Retail sales rose 13.7% to 1.5 trillion yuan ($182 billion)

     

    Inflation was moderate, with the consumer price index up 2.8% from the same period last year, the bureau said.

     

    It said gross domestic product - a measure of economic output - totalled 3.1 trillion yuan ($375 billion) in the quarter.

    SOURCE: Unspecified


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