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China's economy expands 9.5% in first quarter
(chinadaily.com.cn)
Updated: 2005-04-21 11:44
China's economy expanded by an unexpectedly strong 9.5 per cent in the first quarter this year, driven by powerful consumer demand and a rising trade.
Official statistics released yesterday has bolstered economists’ hopes that retail sales and exports are reducing the Chinese economy's reliance on investment as an engine of growth, a dependency seen as a key structural weakness.
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| A photo taken on April 13 shows the Pudong district of the city of Shanghai. [newsphoto/file] |
National Bureau of Statistics spokesman Zheng Jingping said the nation's first quarter gross domestic product of 3.14 trillion yuan (US$377.8 billion) marked a good start to the year. "The economy continues to develop in the direction guided by the government's macro control," he said.
“The composition of growth is healthier than last year," said Ben Simpfendorfer, an economist at JP Morgan. "There has been steady, robust consumer spending coupled with a buoyant export sector." Domestic consumption in the first quarter was strong, with retail sales up 13.7 per cent compared with growth of 13.3 per cent for all of 2004.
However, economist Niu Li of the State Information Centre said the economic growth was faster than expected.
"It will increase worries that the country's fixed asset investment might be rebounding," he said.
Zhuang Jian, a senior economist with the Asian Development Bank, agreed that first quarter economic growth was "a little bit high."
It suggests the nation's economy has not yet achieved a soft landing, he said.
"If the government does not take new measures, including a further rise in interest rates, the economy will show 9.5 per cent growth for the whole year," he said.
China’s exports surged 35 per cent year-on-year to $156 billion in the first three months, while imports grew a relatively weak 12 per cent to $139 billion, resulting $17 billion surplus.
The Chinese Government has taken a raft of macro-control measures since the second half of 2003, such as lending limits on banks and bans on some new fixed asset projects, to cool the over-heating economy.
Last October, the People's Bank of China, the central bank, raised interest rates for the first time in nine years, increasing the benchmark lending rate by 0.27 of a percentage point to 5.58 per cent.
"The central bank has a possibility to further raise interest rates," Zhuang said.
China's consumer price index (CPI) rose 2.8 per cent year-on-year during the first quarter of this year.
"Although the CPI is not so high, the inflationary pressures are still there," he said.
The producer price index rose 5.6 per cent year-on-year during the first quarter of this year.
Growth in fixed investment for the first quarter stood at 22.8 per cent year-on-year, he said. This was compared to a figure of 43 per cent growth for the first quarter last year.
Zhuang said he had confidence the government could keep fixed asset investment and the economy under control.
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