Monday, February 11, 2008

Chinese GDP Rises by Almost 11.4 Percent

by Richard York

The fast growing economy of China has yet again proved itself because the official figures released by the Chinese government indicate that the economy expanded by almost 11.4%. This expansion of the Chinese economy is the fastest one in thirteen years which was recorded in the year 2007. China managed this expansion even if there was a slowdown in the 4th quarter and also in the face of the growing inflation rate. The Gross Domestic Product (GDP) of China shot to almost 11.4% in the last year and came to about 24.66 trillion Yuan which is $3.42 trillion. These official figures of the Chinese economy were disclosed by Xie Fuzhan, who heads the National Bureau of Statistics (NBS) in a press conference in Beijing.

The statistics also shows that fourth biggest economy of the world achieved the distinction of double digit growth for the fifth year. The expansion of the Chinese economy also came in the face of the slowdown of the US economy due to the sub-prime mortgage crisis and the decline in the housing sector of the United States. Xie also said that despite these remarkable figures the chances of China overtaking the economy of Germany were slim because the changes in the exchange rates affected the Chinese economy from becoming the third biggest economy of the world. This remarkable growth of the Chinese economy was also complemented by the rapid rise in inflation which stood at 4.8 percent for the entire year. The central bank’s target in this regard was set at 3%. The increase in CPI for China stood at 6.5% which was slightly lower when compared with the great rise of 6.9%.

The Chinese government had however taken some steps to control the consumer prices in the face of the Spring Festival that began on the 8th of February. Xie Fuzhan also admitted the fact that price pressure would remain high for the year 2008. The rapid rise in the CPI according to Fuzhan was due mainly to the additional in liquidity, sharp rise in food prices mostly in items such as pork, cooking oil as well as petroleum. The growth of the Chinese GDP suffered a slow down to as much as 11.2% in the months of October and December which was the result of some controlling measures that the regulators took. The central bank of China which is The People’s Bank of China had increased the interest rates for as many as six times and the bank had also raised the bank reserve ratio in 2007 for as many as ten times.

The Chinese policy makers have taken to the tight monetary policy so that inflation can be controlled which is why The People’s Bank of China will continue with its controlling of credit. In line with the government’s monetary tightening policy the PBOC asked the commercial banks to keep aside as deposit reserves of about 15%. However speculators say that there would be some relaxation in the monetary policies of China later on in the current year when the worldwide slowdown will affect the Chinese economy.

 

 

 

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