CHINA / National

Booming economy sparks warning
(AFP)
Updated: 2006-04-20 17:33

At the same time, Zheng also argued that China, still a developing nation, needs fast growth to help lift millions out of grinding poverty.

"In solving poverty and subsistence issues, we need relatively fast economic growth," he said.

Some analysts made the same point, saying that fast growth rates were natural for an economy at China's stage of development.

"A 10 percent growth rate is inevitable, It's just like the growing process of a baby. Its necessary," said Chen Xingdong, Beijing-based chief China economist with BNP Paribas Peregrine.

Other data such as inflation suggested no signs of overheating.

The consumer price index rose 1.2 percent in the first quarter. In urban areas, prices increased 1.2 percent and in rural areas they were up 1.1 percent.

Inflation in 2005 came in at 1.8 percent.

China's industrial output, from sweatshops to its massive factory floors across the vast nation, climbed 16.7 percent in the first quarter, largely in line with previous figures and suggesting no imminent break out.

The figures indicated again, however, that China's economy continued to be driven by the twin engines of investment and exports, while consumers in the world's most populous country remain cautious spenders.

Exports increased 26.6 percent in the first quarter, the NBS said, reflecting China's status as the factory of the world.

Retail sales, the main indicator of consumer spending, rose 12.2 percent but that figure, while impressive by most nation's standards, does not reflect the real potential of the Chinese consuming public, analysts say.

China's 1.3 billion people instead continue to put too much money in the bank because of a weak social safety net and fears for the future.


Page: 12
 
 

Related Stories