China has tried dozens of measures over the past few years, including interest-rate increases, in an effort to apply the brakes, but the economy has roared ahead. Above, a textile factory in Sichuan province.
(REUTERS)
China's economy roars ahead
Higher-than-forecast growth stirs new fear it's overheating
China has tried dozens of measures over the past few years, including interest-rate increases, in an effort to apply the brakes, but the economy has roared ahead. Above, a textile factory in Sichuan province.
(REUTERS)
SHANGHAI -- China said yesterday that its economy grew at an 11.9 percent annual rate in the second quarter of this year, the fastest pace in more than a decade, reigniting fears the economy is overheating.
The breakneck growth was fueled by a vast trade surplus, booming retail sales, and huge investments in new factories, roads, bridges, and real estate projects.
Analysts say the government is under mounting pressure to rein in growth, either by raising interest rates or by allowing the country's currency, the yuan or renminbi, to appreciate further against other global currencies, which would slow the growth of exports, make imported goods more competitive, and ease pressure on the economy.
"They do need to tighten, but the question is how," said Frank X. Gong, an economist at J.P. Morgan. "Aggressively hiking interest rates is not the answer."
The government's economic statistics continue to stun analysts, who are constantly being forced to revise their growth estimates upward in a country where every major city seems to be in the grip of a building boom.
For the first half of this year, China said, its economy grew at an 11.5 percent annual rate, far outpacing the projections of government and private analysts after two years of double-digit economic growth. The government had forecast that the economy would grow by about 8 percent this year.
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