Monday, July 16, 2007

China`s economy all set to become world no. 3

by Vipin Agnihotri

China is all set to overtake Germany as the world’s third largest economy by the end of this year. It is worth mentioning in this regard that China’s sizzling economy expanded even quicker than originally thought by the government last year. As a matter of fact, Chinese government has to revise last year growth domestic product (GDP) to 11.1 percent from 10.7 percent. 

This has been achieved thanks to increased exports leading to investment in production facilities, which in turn boost exports. Another significant factor is investment worth more than US$60 billion annually foreigners who bet on continued high growth spurred by the Beijing Olympics next year.

China’s trade surplus has kept up a momentum in 2007. Statistic wise, during the first half, the trade surplus rose $112.5 billion, up a whopping 83.1 percent from the corresponding period last year. In addition, China’s foreign currency reserves have increased this year at a rate of $1.02 million per minute. But behind such a huge growth, China suffers from increasing consumer and real estate prices. Because of this, China has to tighten its monetary policy, which includes scrapping taxes on interest income and increasing interest rates further.

 

 

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