China GDP Exceeds Expectations for the First Quarter

April 15th, 2011
in econ_news

China flag Econintersect:  The Financial Times has reported that China GDP rose by 9.7% (annual rate) in the first quarter of 2011.  This was little changed from the fourth quarter 2010 GDP growth rate of 9.8%.  The expectation, according to Bloomberg, was for a 9.4% number.  The strong number is a surprise because China has been trying to tighten liquidity for the past six months to try to control inflation and keep economc growth within lower bounds.

Follow up:

The government also announced that inflation had risen again in March, to a 5.4% increase over March 2010.  This indicates continuing acceleration of inflation because the February increase had been 10% less, at 4.9% year-over-year.

From the Financial Times:

“Despite the most aggressive period of tightening in years the government cannot seem to slow the economy down,” said Alistair Thornton, an economist at IHS Global Insight. “Beijing has had to regularly revert to heavy-handed administrative measures, such as direct price controls in the food sector and limits on house purchases in the property market in order to contain inflationary pressure.”

Many economists said the data showed that the economy had not slowed meaningfully, and that Beijing would likely continue its tightening efforts to rein in excess liquidity and slow rapid price rises that the Communist party fears could damage social stability.

Statements from China's statistics bureau indicated the government believes that the anti-inflation efforts are starting to take effect. 

Sources:  Financial Times and Bloomberg 

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