BEIJING: China’s economy roared ahead in the year ending September, stoking concerns that the world’s sixth largest economy and an increasingly important buyer of Asian exports is in danger of overheating.
According to the State Statistical Bureau, China's gross domestic product (GDP) rose 9.1% between the third quarters of 2002 and 2003, accelerating from the 6.7% growth in the year to June.
The country's strong growth has become a political issue in the United States where law makers argue that Beijing should allow its currency to rise, reflecting its economic strength and making hard-pressed US manufacturers more competitive.
US officials are expected to press the issue when President George W. Bush visits Asia over the coming week.
China's GDP for the first nine months this year was up 8.5% from a year earlier, and bureau spokesman Qiu Xiaohua said that pace would probably be sustained for all of 2003.
The third-quarter figure came in at the high end of analysts’ expectations and pointed to a potentially faster growth rate in the year to the fourth quarter, economists said.
“Depending on whether more policy measures are taken trying to cool down the economy, I think it could go to around 9.5%,” Citigroup economist Yiping Huang said of fourth-quarter growth.
China’s boom is proving to be a boon to the rest of Asia as the country imports heaps of raw materials and components to feed its production lines. Data released earlier this week showed China’s imports in the first nine months soaring 40.5%.
But Qiu cautioned that all was not well with the world’s fastest growing major economy, listing problems such as rapid credit growth, mounting unemployment, energy shortages and rising inventories.
In response to repeated questions about the danger of overheating, Qiu said while investment growth was high, inflation was mild and consumer demand lukewarm.
“Since there are many complicated factors in the economy, we cannot use simple terms like ‘hot’ or ‘not hot’,” he added.
Much of the concern about overheating has focused on fixed asset investment, which was up 26.5% in September from a year earlier and 30.5% for the first nine months.
For all of last year, fixed asset investment was up 16.1%, while the economy grew 8%.
Seeking to prevent bubbles in some sectors, authorities have moved to curb lending, restricted the buying and building of luxury property, and have said they would ease back spending on infrastructure.
“Government officials are quite worried about over-investment in specific industries,” Citigroup's Huang said. “I’m talking about over-investment in property, iron and steel, in automobiles and so on.” – Reuters