China 'recovers' from global slump

Growth accelerates to 10.7 per cent in last quarter but overheating worries emerge.

    Data released on Thursday raised fears of possible overheating in the economy [Reuters]

    But he added that in the face of ongoing "uncertainties" and a weak global outlook, the government would avoid major changes in economic policy.

    The figures put China's total gross domestic output for 2009 at $4.9 trillion, bringing it closer to overtaking Japan as the world's number two economy after the US.

    'Developing country'

    Nonetheless, Ma stressed that China sees itself as a developing country with a wide income disparity between its urban and rural populations.

    Average income for city dwellers in 2009 was $2,700, he said, while in the populous countryside it was just $752.

    "Despite the increase in our GDP and economic strength, we still have to recognise that China is a developing country," Ma told a news conference. "We have to be keenly aware of that."

    China's leaders have said stimulus spending will continue but are worried about rising prices and have ordered banks to curb lending after a record surge in 2009.

    According to Thursday's figures, consumer prices picked up in the fourth quarter of 2009 after falling for much of the year.

    Prices rose 0.6 per cent in November from a year earlier and spiked by 1.9 per cent in December.

    "That's a huge jump," Ken Peng, an economist with Citigroup, told the Associated Press.

    He said it was the sharpest one-month rise in inflation since February 2008, when China was suffering record consumer price hikes.

    Peng said the data showed it was time for the government to call a halt to stimulus measures.

    The spectre of inflation is especially politically sensitive in China, because rising prices erode the economic gains that the ruling Communist party has made the basis of its claim to power.

    SOURCE: Agencies


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