Considering the size of China, this is no surprise

[Flashermac]

The Times April 17, 2006

 

China's growth tops 10% ahead of US talks

 

From Jane Macartney in Beijing

 

 

CHINA's economic growth has accelerated in the first quarter of this year, belying forecasts that the Asian nation's breakneck boom was moderating and also pushing its economy firmly ahead of Britain into fourth place in the world.

 

Output in the first three months of this year is estimated to be 10.2 per cent higher than in the same period of 2005. This blistering pace, which even the Chinese authorities believe to be unsustainable, is likely to raise pressure on President Hu Jintao during his visit this week to Washington to take more decisive steps to allow China's currency to rise faster.

 

Mr Hu revealed the figure in a televised meeting with a visiting politician from Taiwan. The growth marks a pick-up from last year's fourth quarter, when GDP rose by 9.9 per cent from a year earlier. China's GDP expanded on average by 10 per cent a year between 2003 and 2005, taking the country past the output of Italy, France and, most recently, Britain. Only the US, Japan and Germany have economies larger than China's.

 

Evidence that China's economy is accelerating, rather than moderating, as hoped, could also fuel further speculation in commodity markets. The prices of several industrial metals and materials hit new highs last week, driven in part by demand from China to meet its boom in construction, manufacturing and transport.

 

The robust growth figure comes before a summit with President Bush that already promised tensions over trade and exchange rates. America's exploding bilateral trade deficit with China hit $202 billion (£115 billion) last year and is likely to be at the top of the summit agenda. Washington has become increasingly impatient with Beijing.

 

In spite of China's relaxations of exchange controls and forecasts of lower growth announced ahead of the visit, some US lawmakers and economists contend that the yuan is unfairly undervalued by as much as 40 per cent, handing China an advantage that is destroying American jobs.

 

Mr Hu said that Beijing was not pursuing fast growth for its own sake. He said: "We are paying more attention to the transformation of the mode of growth, resource conservation, environmental protection and, more importantly, the improvement of the lives of the people."

 

China's leaders are increasingly worried about possible overheating. A meeting of its State Council, or cabinet, has concluded that money supply is growing too quickly and credit is too loose, according to a report of its discussion on Friday. The report said that China must restructure sectors having overcapacity to control any further expansion, although it cited no specific steps to curb credit or investment.

 

Some Chinese economists say that the case is hardening for the authorities to cool growth, perhaps by requiring banks to tie up more cash with the central bank -- money that could therefore not be extended as credit.

 

However, China needs fast growth to create jobs. Arthur Kroeber, of China Economic Quarterly, said he expected the authorities, despite their rhetorical concern, to try to avoid tightening policy as long as possible. China's National Bureau of Statistics will release detailed first-quarter figures on Thursday. Economists had pencilled in growth of about 10 per cent after a raft of strong partial data.

 

Separately, China yesterday announced new rules that should make it easier for listed companies to raise money on its stock markets -- but stopped short of reversing a ten-month ban on initial public offerings. The China Securities Regulatory Commission said it would introduce more market-orientated rules for the pricing and timing of additional stock offerings by companies already listed on China's stock exchanges.

 

 

[cavanami]

Size is not everything! (I keep saying that to the TGF )

 

A huge thing is that the labor rates are dirt cheap...like $0.50/hour (USD). Also they have a 1 billion labor pool...and all the idiot foreign companies came running there over the past 20 years giving China all the technology for free....dahhhh....what can one expect to happen??? ::

 

Must say that China has done a super job of improving their infrastructure. First time I worked in China, 1980, there was like dirt roads everywhere...1990, they had modern, paved toll roads (the Chinese know how to make money)...2000, they were taking over the world market for producing steel (I installed several steel mills in China)...and they keep moving forward.

 

Will they be #1 in the world??? they are moving in that direction!