Chinese officials said that economic growth in 1998 was 7.8% - just off the 8% government target. Gross domestic product (GDP) for the year rose to 7.97 trillion yuan ($962bn).

But despite the glowing figures, the Asian crisis overspilled into China earlier in the year. The beginning of the year did not start off well as Chinese officials reported that economic growth stood at 7%, down from the 8% target.

Despite the government's promise that the currency would remain stable, foreign exchange reserves dwindled and foreign investment fell to around $40bn, down 11% on 1997. Investors from South Korea, Japan, Hong Kong and Taiwan all took fright.

Thailand was at the heart of the Asian crisis while China refused to devalue

The value of exports fell to around $182bn, which in turn pulled down export growth, the country's traditional economic mainstay.

Immune from Asian flu

Economists welcomed the new figures showing that China had survived against the odds.

Fred Hu, head of the economic research unit at investment bank Goldman Sachs' Hong Kong office, said: "China has defied the prophets of doom. A lot of people thought the Chinese economy would be dragged down by the Asian financial crisis and natural disasters."

Devastating flooding in the summer, coupled with the snowballing Asian crisis prompted the government to inject some life into the flagging economy with a £$12bn spending programme.

In March, Premier Zhu Rongji introduced a radical, wide-ranging modernising programme. He introduced reforms aimed at ending subsidies to the state sector, cutting the bureaucracy in half and encouraging people living in work unit flats to buy them from the state.

These reforms however have sparked rising unemployment and plummeting profitability in the state sector.