China said yesterday that its economy grew 10.3 per cent in 2010, marking the fastest annual pace since the onset of the financial crisis and underlining the country’s growing might.
Gross domestic product in China rose by 9.8 per cent in the fourth quarter. This showed it had accelerated from the previous quarter and exceeding analyst expectations. In the meantime consumer inflation eased in December as Beijing moved to rein in prices.
The 2010 GDP figure, up from a revised 9.2 per cent growth in 2009, highlighted China’s powerful performance in a year when it overtook Japan to become the world’s largest economy behind the United States.
The result is slightly better than the forecast of the World Bank, which had predicted 10 per cent annual growth.
“Currently the economy is in a critical period of transforming from recovery to stable growth,” Ma Jiantang, Commissioner of the National Bureau of Statistics, said.
Mr Ma said China would step up efforts to transform the country’s “economic growth pattern” – referring to Beijing’s oft-stated aim to boost domestic consumption and reduce its reliance on exports and investment.
His comments were similar to those of President Hu Jintao, who told US business leaders during a high-profile visit to Washington on Wednesday that China would boost interior demand and consumer spending. The data triggered falls across Asian stock markets as investors bet on further tightening measures to cool the red-hot economy.
Tokyo shed 1.13 per cent, Shanghai was 1.10 per cent lower, Hong Kong fell 1.15 per cent and Sydney lost 0.97 per cent after the figures were released.
The country’s consumer price index, the main gauge of inflation, rose by 4.6 per cent year-on-year in December compared with 5.1 per cent in November, which was the fastest pace in more than two years.
The index rose 3.3 per cent for all of 2010 – exceeding the government’s full-year target of three per cent as food costs soared.
“In 2011 we need to take the task of controlling prices very seriously,” Mr Ma said, but added: “We should have full confidence that we will be successful in 2011.”
Analysts said the pick-up in growth in the fourth quarter – partly driven by stronger exports – and the still-high inflation figure in December supported the case for further interest rate hikes and bank lending curbs.
“Price pressures will remain uncomfortably strong in the months ahead, and the dip in headline CPI inflation in December will likely be temporary,” said Brian Jackson, an analyst at Royal Bank of Canada.
IHS Global Insight analyst Alistair Thornton agreed, noting: “A new wave of credit expansion is driving inflationary pressure, in both consumer prices and asset markets, with a re-acceleration in construction and fixed investment.”
The value of exports reached $1.578 trillion in 2010, up 31.3 per cent after hitting a record high for a single month in December. Output from the country’s millions of factories and workshops rose 15.7 per cent for all of 2010. This was faster than in 2009 as manufacturers cranked up activity to meet growing demand for Chinese-made goods.
Urban fixed asset investment, a measure of government spending on infrastructure, rose 24.5 per cent over the 12 months – slower than in the previous year as Beijing started to wind back crisis-driven stimulus measures.
Retail sales, a key indicator of consumer spending, rose 18.4 per cent in 2010.
As the United States and Europe struggle to spur growth, Beijing has been trying to slow its economy and stem a flood of liquidity that is fanning inflation and driving up property prices, straining household budgets.
The central bank last Friday again ordered banks to increase the amount of money they keep in reserve, effectively putting a cap on lending, after raising interest rates twice in the fourth quarter.