World Bank lifts estimate of China growth – Richard McGregor

From the Financial Times (link)

The World Bank has revised upwards its estimate for Chinese growth this year to 9.5 per cent, but has warned that Beijing needs further action to rein in investment and credit growth and entrench structural change in the economy.

The bank, in its quarterly report on the Chinese economy, says on Wednesday Beijing could begin to wind back a build-up of liquidity in the financial system from foreign exchange inflows by accelerating the appreciation of the currency, the renminbi.

Foreign exchange inflows totalled US$56bn in the first quarter this year, fuelled by China’s swelling trade surplus, steady foreign direct investment and a surprising renewed surge in speculative capital inflows.

Also see “China Economy’s Rapid Growth Seen as Continuing Rest of Year” from the Wall Street Journal (link):

China’s economy is expected to maintain its fast growth throughout this year, according to a state-run think tank that forecast a rise of 9.8% in the second quarter and 10% in the third quarter compared with the same periods of 2005.

While slightly slower than the 10.2% increase in gross domestic product reported in the first quarter compared with last year, such growth levels are still much faster than the 8% annual target set early this year by China’s leaders.

The figures were issued by the State Information Center, a think tank under China’s State Council, or cabinet. They are the latest evidence that China’s economy is in danger of overheating. Also, the growth rates could have political consequences, as this year’s rise has been driven mainly by jumps in exports and fixed investments.

May 10, 2006 1:53 PM
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Categories: Economy