One stellar feature of the post-crisis global economy is China's remarkable performance. Financial Times reported as follows on China's Q4 2009 performance:
China comfortably beat its target of 8 per cent economic growth last year and came close to overtaking a stagnant Japan as the second-biggest economy in the world, even as signs emerged on Thursday that inflationary pressures are building.
The economy accelerated in the fourth quarter to expand by 10.7 per cent and grew by 8.7 per cent in 2009, in spite of the biggest global economic crisis in generations.
China’s gross domestic product reached $4,900bn, just short of the $5,100bn Japan is expected to register after last year’s contraction, according to Goldman Sachs.
However, consumer price inflation jumped sharply again last month, from 0.6 per cent in November year-on-year to 1.9 per cent, the latest indication that the economy could be at risk of overheating. Factory gate prices rose 1.7 per cent in December, reversing November’s 2.1 per cent fall.
“My first worry is how to control price rises while promoting economic growth, ” said Ma Jiantang, director of the National Bureau of Statistics, in the latest in a series of comments by senior officials about the risks of inflation. “Another concern that is shared by us all is that the price of assets is probably growing too fast. For instance real estate in some cities is growing too fast.”
Andrew Burns, a senior economist at the World Bank, said on Thursday that there were “some signs of bubbles” in the Chinese economy, especially in the housing sector.
Regulators have ordered some banks to stop new loans until the end of the month for fear that frantic lending had been compromising monetary policy that most economists already considered too loose.
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