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Last Updated: Wednesday, 20 July 2005, 10:24 GMT 11:24 UK
China's economy keeps on motoring
Chinese men on bicycles
China's economy is undergoing a broad modernisation plan
China's economy has grown more quickly than expected in the first six months of 2005 despite efforts by the government to put the brakes on.

The National Bureau of Statistics said the economy grew 9.5% from a year earlier in the first half, more than the 9.3% figure expected by analysts.

Total gross domestic product (GDP) between January and June reached 6.7 trillion yuan (466bn; $811bn).

Exports and investment in construction and factory equipment drove growth.

'Slowing the economy'

"Fairly good overall economic performance was recorded in the first half of this year," the statistical office said, adding that "China's high rate of bank savings, investment, robust market demand and abundant labour forces" helped to underpin growth.

Looking at China's development targets, we see that we need to preserve fairly high economic growth
Zheng Jingping, National Bureau of Statistics

In the six months through June, investment in fixed assets climbed by 25% to 3.29 trillion yuan. The statistical office called the rebound in investment "unreasonable".

China has tried to rein in its economy amid fears that it will overheat, and has introduced measures such as imposing stricter lending requirements on banks and capping construction projects by regional governments.

"The need for slowing the economy is still quite obvious," said Yiping Huang of Citigroup in Hong Kong. "There are still some problems in the economy that policy makers need to address."

The government's success has been mixed and analysts are now predicting that growth for the whole of 2005 is likely to be closer to 9% than China's more conservative prediction of 8%.

'Still growing rapidly'

"Overall the message is that the economy is still growing rapidly," said Tai Hui, an analyst at Standard Chartered in Hong Kong.

"But the government would rather have 9.5% growth than anything that would be considered too slow."

According to the Bureau of Statistics, China's average annual GDP growth rate over the past 27 years has been about 9.4%.

Zheng Jingping, spokesman of the National Bureau of Statistics, told reporters that China's social development needs made fast, but controlled, growth vital.

"Looking at China's development targets, we see that we need to preserve fairly high economic growth," he said.

"We need this in order to resolve the employment problem, to lessen the gap between rich and poor and to catch up with developed countries.

"This is a main goal of the macro-economic controls."


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