Thursday, January 26, 2006

China's Economy Grew 9.9% in 2005

According to Bloomberg China's economy grew 9.9 percent in 2005, overtaking Britain, putting it in fourth place behind the United States, Japan and Germany , powered by record exports and investment in manufacturing.

GDP rose to 18.2 trillion Yuan [$2.26 trillion] after expanding 10.1 percent in 2004, Statistics Bureau Commissioner Li Deshui said in Beijing. While the British economy was worth £1.13 trillion [$2.02 trillion] in 2005, disclosed by the Office for National Statistics in London.

Exports have helped China's economy more than double in size over the past decade, pushing commodities prices to records and increasing trade tensions with the United States and Europe. The government needs consumer spending to drive growth this year because excess manufacturing capacity threatens to cause bankruptcies and bad loans, Li said.

China's economy grew 9.9 percent in the fourth quarter from a year earlier, after expanding a revised 9.8 percent in the previous three months, the statistics bureau said Wednesday. Economists forecast growth of 9.5 percent in the quarter and 9.8 percent for the full year, according to a Bloomberg.

The U.S. economy, which measured $11.7 trillion in 2004, is the world's largest, followed by Japan and Germany. India's central bank Tuesday forecast expansion of as much as 8 percent in the fiscal year ending March 31 for the nation's $665 billion economy.

Average growth of 10 percent is sustainable for "many years," said Li, who is also a member of the central bank's policymaking board. Even so, he added, "overproduction is a threat because it will introduce bad loans among banks, cause bankruptcies and lead to rising unemployment."

The Standard Chartered forecast China's growth for 2006 is in the range of 9.2 or 9.3 percent , while Goldman Sachs projection that the economy would expand 9.6 percent this year and 9.1 percent in 2007.

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