China Q4 GDP Up 10.7 Percent

China ended 2009 on a high note as a 10.7 percent year-on-year rise in the fourth quarter brought full-year growth up to 8.7 percent, well above the government's annual growth target of 8 percent.

In a press conference held by the State Council on January 21, Ma Jiantang, director of the National Bureau of Statistics (NBS), released several key economic indicators for 2009, which signified that the world's third largest economy was consolidating and broadening its recovery. After hitting 6.2 percent in the first quarter of last year, the growth rate increased to 7.9 percent in the following quarter and then rose to 9.1 percent in the third—a sustained rebound from the global slump.

Xu Xianchun, deputy director of the NBS, wrote in China Reform that the increase of consumption and gross capital formation helped China's economy withstand the decline in net exports of commodities and services.

Official GDP figures for both the last quarter and the entire year came close to the forecasts of 18 economists surveyed on January 12 to January 14 by Century Weekly.

According to the consensus, growth forecasts for the quarter ranged from 10.0 to 11.5 percent. Citing a low base in the final quarter of 2008, due to a sharp economic contraction, then the accelerated recovery of the real economy, economists predicted the overall growth for 2009 to be at 8.7 percent.

Last December, China's exports increased for the first time in 13 months, with a growth rate beyond market expectations.

In the first three quarters of 2009, China's GDP increased 7.7 percent year-on-year, with investment contributing 7.3 percent points and consumption 4 percentage points, while exports subtracting 3.6 percentage points.

Wang Tao, an economist with UBS Securities, said that China's economic growth in 2010 will be driven by net exports, robust domestic consumption, and accelerated fixed-asset investment growth. He predicted that the growth rate of China's GDP would be 9 percent or higher in 2010.

Fast economic recovery has paved the way for the eventual exit of the stimulus policy. On January 12, the People's Bank of China (PBOC), the country's central bank, increased the reserve requirement ratio by 0.5 percent points to 16 percent. Economists predict that monetary policy may be tightened earlier than expected, while PBOC interest rates may increase halfway through 2010.

Full Article in Chinese: http://economy.caing.com/2010-01-21/100109946.html

(Translated by GC)