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Friday 21st of January 2011
January 20, 2011    

Chinese economic growth continues to surge

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by Kay Murchie
Chinese economic growth continues to surge

China, which is the world’s second largest economy, experienced growth of 10.3% in 2010 - much higher than expected, according to the National Bureau of Statistics.

While the growth is staggering, it has again raised fears of the economy overheating, which is adding to inflation pressures.

In addition, fourth quarter growth was better than expected, at 9.8%, driven by stronger exports and suggests no signs of a slowdown within the economy.

However, stubbornly high inflation continues to weigh on the economy.

Inflation fears are always a concern to Chinese officials due to the potential for price rises to trigger civil unrest.

Figures today revealed that inflation eased to 4.6% in December, from November’s 5.1%. The People’s Bank of China has lifted interest rates twice in the last four months to curb inflation.

However, analysts are still concerned for high inflation and said the Government needs to take more action. The inflation figure for December was higher than expected.

The figures come as President Hu Jintao came under further pressure on a visit to the US to allow the yuan to appreciate.

The US argues that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.

Trade groups have argued that the yuan, also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.

Beijing loosened its currency peg last June but the US has remarked that the yuan has appreciated just 2.65% against the dollar since that time.

In other news this week, the National Bureau of Statistics also revealed China’s property prices rose for the fourth consecutive month in December, albeit at a slower pace.

Prices rose 0.3% in December, taking the annual rate to 6.4% – although this is half of the peak reached in April 2010 – when prices surged 12.8%.

However, prices have remained stubbornly high despite several Government incentives to avoid a property bubble.

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