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Last Updated: Thursday, 20 April 2006, 10:32 GMT 11:32 UK
No sign of Chinese growth slowing
A new deep water port being built in Shanghai
Industrial output is increasing by more than 16%
The Chinese economy has continued to grow faster than predicted, prompting calls for government action to curb investment and tighten lending.

Output rose 10.2% in the first quarter of 2006, according to official data, topping growth in the last quarter of 2005 and for last year as a whole.

Beijing has pledged to take some of the heat out of its breakneck economic rate by cutting public sector investment.

But spending on factories, roads and other assets rose 27% over the quarter.

Racing ahead

Economists said they expected the authorities to take action soon to tighten the money supply and reduce liquidity in the banking market to curb borrowing.

Beijing is aiming for 8% growth this year, a significant drop from last year's 9.9% expansion, amid concerns that unbridled growth could fuel inflation and destabilise the economy.

We need to control the availability of credit
Zheng Zinping, Chinese Statistics Bureau

President Hu Jintao recently expressed concerns about the blistering pace of economic growth, saying the government wanted to focus more on improving the lives of China's poorest.

But the International Monetary Fund and other experts believe China's growth target is unrealistic, forecasting higher growth of 9.5% this year.

Beijing has avoided raising interest rates despite worries about the economy overheating.

However, it is trying to gradually shift the balance of economic growth away from investment to consumption.

Recently, the authorities called on banks to screen potential borrowers more thoroughly in an effort to reduce lending.

Sustainable growth

Revealing the latest growth figures, Chinese officials acknowledged that action was needed to promote more efficient growth.

"We need to control the availability of credit," said Zheng Zinping, a spokesman for China's National Statistics Bureau.

"We need to attach importance to the sustainability of economic growth."

However, Mr Zheng said that current growth was within its designated parameters and that investment was needed to tackle rural poverty.

Analysts said state expenditure on construction projects needed to fall while banks should be allowed to invest more overseas, reducing the amount of domestic credit available.

"The re-acceleration in GDP growth was led by a rebound in fixed-asset investment growth, suggesting local governments still continue to support construction projects in order to boost growth in their regions," said Qu Hongbin, chief China economist for HSBC in Hong Kong.

"This is contrary to the central government's policy."

The accelerating rate of Chinese growth is also likely to exacerbate trade tensions with Washington as President Hu Jintao meets George W Bush on Thursday.




SEE ALSO:
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China worried over pace of growth
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25 Jan 06 |  Business


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