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CHINA / National

GDP up a stunning 10.2% in first Qtr
(Xinhua/chinadaily.com.cn)
Updated: 2006-04-20 12:01

Fueled by strong investment, China's economy soared by a stunning 10.2 percent in the first quarter of this year, a government spokesman said in Beijing on Thursday while fanning away worries that the economy might be overheated.

Gross domestic product, the broadest measure of goods and service output, reached 4.33 trillion yuan (about 540 billion U.S. dollars), spokesman Zheng Jingping for the National Bureau of Statistics announced at a press conference.


Zheng Jingping, spokesman of the National Bureau of Statistics. [CIIC file]
"The growth seems to be on the fast side, but I want to say such a rate still falls in the range of the potential economic growth. It remains basically normal, though reaching the upper limit," he said.

"It should arouse concern, and actually has aroused our attention," Zheng added.

Zheng said rapid growth in fixed asset investment and bank loans were "prominent problems" that have to be addressed, echoing President Hu Jintao's weekend warning on the risks of too high a growth rate.

"If the economy develops too fast because of naked pursuit of growth, we will be punished by the laws of economics and the laws of nature," Zheng said.

"The lesson of big ups and downs is vivid in our minds and we should avoid the one-sided and blind pursuit of speed."

At the same time, Zheng also argued that China, still a developing nation, needs fast growth to help lift millions out of grinding poverty.

"In solving poverty and subsistence issues, we need relatively fast economic growth," he said.

Some analysts made the same point, saying that fast growth rates were natural for an economy at China's stage of development.

"A 10 percent growth rate is inevitable, It's just like the growing process of a baby. Its necessary," said Chen Xingdong, Beijing-based chief China economist with BNP Paribas Peregrine.

In an interview with Xinhua, Wang Xiaoguang, a macro-economics research fellow with the National Development and Reform Commission, said he believes the economy was largely being driven by hefty investment.

Investment in roads, factory equipment and other fixed assets totaled 1.39 trillion yuan, a sharp growth of 27.7 percent, or an increase of 4.9 percentage points year on year.

Investment in urban areas climbed 29.8 percent to 1.16 trillion yuan, while that in rural areas reached 230 billion yuan, up 18.1 percent. China is launching a massive "socialist new countryside" campaign to boost rural development, in a bid to narrow the widening urban-rural gap.


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