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China's economic growth accelerates amid stimulus
Published in Saudi Press Agency on 16 - 07 - 2009


China's economic growth accelerated in the
second quarter amid a stimulus-fueled investment boom,
boosting hopes the world's third-largest economy is
emerging from the global downturn, according to AP.
The economy expanded by 7.9 percent in the April-June
period from a year earlier, up from 6.1 percent growth in
gross domestic product the previous quarter, the National
Bureau of Statistics reported Thursday.
«The data showed the economic recovery is stronger than
expected,» said economist Zhu Jianfang of Citic Securities
Ltd. «There will be no suspense about achieving the
government's goal of 8 percent GDP growth this year.»
Many analysts expect China to be the first major country
to emerge from the worst global slump since the 1930s. That
could help pull the rest of the world out of recession as
China buys more raw materials, industrial components and
consumer goods from struggling economies in the United
States, Europe and elsewhere.
The International Monetary Fund earlier this month raised
its forecast of China's 2009 growth by one percentage point
to 7.5 percent. The World Bank boosted its forecast last
month from 6.5 percent to 7.2 percent.
Goldman Sachs said compared with the previous quarter _
the way other major economies measure growth _ China's
second-quarter growth accelerated to 16.5 percent on an
annualized basis.
The government warned, however, that a full-fledged
recovery is not firmly established.
«The difficulties and challenges in the current economic
development are still numerous,» a statistics bureau
spokesman, Li Xiaochao, said at a news conference. «The
basis of the rebound of the people's economy is not
stable.»
The faster growth came despite a plunge in China's trade
and foreign investment since late 2008, reflecting China's
continued dependence on its 4 trillion yuan ($586 billion)
stimulus to keep the economy expanding.
The government is trying to reduce reliance on exports by
boosting domestic consumption with its plan to pump money
into the economy through a massive scheme to build new
airports and other public works.
Most of the money has gone to state-owned construction
companies and suppliers of steel and concrete, but it is
flowing into the private sector as those companies pay
workers and buy other materials.
Rock Jin, chief economist for Sinolink Securities in
Beijing, said 2.5 percentage points of the 7.9 percent
quarterly growth came from stimulus-financed investment and
the rest from production.
«If the investment-driven portion of GDP growth can be
maintained around 2.5 percent, it will be no problem
achieving the goal of 8 percent growth this year,» Jin
said.
Consumer prices in June fell 1.7 percent from a year
earlier, the statistics agency said, giving Beijing a freer
hand to keep spending on its stimulus without a danger of
adding to pressure for prices to rise.
Beijing's stimulus aims to reduce reliance on exports by
boosting domestic consumption through higher spending on
construction of highways and other public works. Most of
the money has gone to state-owned construction and steel
companies, but it is starting to flow to the private sector
as builders hire workers and buy other materials.
Industrial output rose 10.7 percent in June from a year
earlier, faster than May's 8.9 percent growth, the
statistics agency said. It said retail sales rose 15
percent in the first half from a year earlier, while
first-half spending on factories and other fixed assets was
up 33.5 percent.
The wave of positive data in recent weeks has encouraged
investors, driving a stock market boom that has boosted
China's benchmark Shanghai Composite Index by 75 percent
since the start of the year.
The latest rise in quarterly growth «indicates that the
country is on course to achieve its growth target for the
year,» said Jing Ulrich, JP Morgan & Co.'s chairwoman for
China equities, in a report to clients.
Li, the government spokesman, said Beijing is closely
watching prices to make sure its stimulus and rapid growth
in bank lending and investment do not ignite inflation.
«There are still quite a lot of uncertainties,» the
spokesman said. «We should remain watchful about changes
in prices.»


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