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GDP rose 8.7% in 2009
Published on: 2010-01-21
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BEIJING -- China's economy grew 8.7% in 2009, government data showed Thursday, surpassing the 8% target Beijing had set early last year, when some economists were warning that growth might reach only 5%.


Growth in the fourth quarter of 2009 hit 10.7% from a year earlier, reflecting the recent recovery in global trade and a continued surge in domestic property and infrastructure.


In 2008, China had growth of 9.6%.


Consumer prices in December rose 1.9% from a year earlier, the National Bureau of Statistics said, accelerating sharply from the 0.6% rise in November. The last two months' CPI increases followed nine months of declines.


Some of the pickup in growth was because year-earlier figures were depressed by the global financial crisis, which was at its worst in the fourth quarter of 2008 and early 2009. But the swift recovery and sharp uptick in the CPI are still likely to bolster the view among economists and some officials that Beijing should now unwind the easy credit and massive government investments that have driven the rebound, to stave off higher inflation and the possible formation of asset-price bubbles.


"The strong recovery shown in the data clearly point to a winding back of stimulus," said Royal Bank of Canada Capital Markets senior strategist Brian Jackson. "An early tap on the brakes would be better than allowing the economy to accelerate too quickly, forcing Beijing to slam on the brakes at a later date."


Also signaling growing inflation pressures, the producer price index in December rose 1.7% from a year earlier, after November's 2.1% fall, which capped 12 months of declines. For the whole of 2009, CPI fell 0.7%, and the PPI fell 5.4%, the data showed.


Though growth picked up and exports began to grow again in December after 13 months of declines, the statistics bureau chief, Ma Jiantang, said: "The base of the world economy recovery is relatively weak. There are uncertainties in domestic economic development."


He said China will maintain the consistency and stability of its macroeconomic policy.


The government, however, has already begun to scale back its pro-growth policies by curbing lending and mopping up funds in the financial system.


The central bank, which has already guided money-market interest rates higher and required banks to keep a bigger share of deposits on reserve to lock up funds, has said it will direct banks to balance out their lending through the year, after a loan surge in early 2009 that culminated in new yuan loans nearly doubling to 9.59 trillion yuan last year.


The bank regulator said Wednesday it expects a substantial drop in new yuan lending this year to about 7.5 trillion yuan, while a person familiar with the matter said Bank Of China Ltd., one of the nation's Big Four banks, has ordered its credit officials to halt any new yuan loans due to overly fast lending growth so far in January.


Industrial production grew 18.5% in December from a year earlier, below expectations of a 19.8% rise and the 19.2% gain recorded in November.


Fixed-asset investment in China's urban areas rose 30.5% in 2009, slowing from the 32.1% rise in the January-November period.


The statistics bureau also said China's economy grew faster than initially reported in the first and third quarters of last year. It said third-quarter GDP grew 9.1%, faster than the 8.9% growth the statistics agency reported in October. The bureau said GDP grew 6.2% in the first quarter, higher than the 6.1% originally reported.

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