China’s economy grows 10.3 per cent

Data show inflation moderating but speculative property deals accounting for a big chunk of lending by state-run banks.

china economy
The government aims to further boost domestic consmption and reduce reliance on exports [EPA]

China has announced that its economy grew 10.3 per cent in 2010, marking the fastest annual growth since the onset of the global financial crisis, and underlining  the country’s growing economic clout.

The GDP figure, up from a revised 9.2 per cent growth in 2009, highlighted China’s powerful performance in a year when it overtook Japan to  become the world’s second-largest economy behind the US.

“Currently the economy is in a critical period of transforming from recovery to stable growth,” Ma Jiantang, commissioner of the National Bureau of Statistics, said on Thurday.

Ma said China would step up efforts to transform the country’s “economic growth pattern” – referring to the government’s aim to boost domestic consumption and reduce its reliance on exports and investment.

His comments were echoed by Hu Jintao, the president, who told US business leaders during a visit to Washington on Wednesday that China would boost interior demand and consumer spending.

The country’s consumer price index, the main guage of inflation, rose by 4.6 per cent year-on-year in December compared with 5.1 per cent in November, which was the fastest pace in more than two years.

The index rose 3.3 per cent for all of 2010 exceeding the government’s full-year target of three per cent as food costs soared.

Inflation still high

Analysts said the still-high inflation figure in December supported the case for further interest-rate increases and bank-lending restrictions.

Output from the country’s millions of factories and workshops rose 15.7 per cent for all of 2010, faster than in 2009 as manufacturers cranked up activity to meet growing demand for Chinese-made goods.

Urban fixed asset investment, a measure of government spending on infrastructure, rose 24.5 per cent over the 12 months – slower than in the previous year as Beijing started to wind back crisis-stimulus measures.

Retail sales, an important indicator of consumer spending, rose 18.4 per cent in 2010.

As the US and Europe struggle to spur growth, Beijing has been trying to slow its economy and halt a flood of liquidity that is fanning inflation and driving up property prices, straining household budgets.

Last week, the central bank again ordered banks to increase the amount of money they keep in reserve, effectively putting a cap on lending, after raising interest rates twice in the fourth quarter.

Source: News Agencies