China Reports Very Fast Growth in the First Half of 2006

According to the National Bureau of Statistics of China the Chinese economy surged 10.9% year-on-year in the first half of this year. The booming construction and bank loans could ignite inflation - driven by the building boom, China's economy grew a stunning 11.3 percent in the second quarter from a year ago. The 11.3 percent growth in the second quarter compared with a year ago exceeded forecasts (the fastest pace in a decade). Exports also surged, but the government said consumer inflation stayed low at just 1.3 percent.

The world's 4-th largest economy defied a series of cooling measures implemented by the government over the past six months - they increased borrowing costs and curbing investments after first-quarter growth hit an already strong 10.3 percent.

The total GDP of China between January and June reached 1.14 trillion USD.

China's macroeconomics presents overheating of investment in the first half of this year. Economists said they expected Beijing to tighten the monetary policy or to respond by raising interest rates for a second time this year and possibly allowing the yuan to rise against the U.S. dollar, which could slow growth by making exports less competitive. China's multibillion-dollar trade surplus has led to complaints that its currency is undervalued.

The fast growth in China could reduce poverty, pay for reforms of state industry and create jobs for millions of laid-workers and new university graduates. But they worry that a wave of construction of factories, shopping malls and luxury apartments is creating a glut of unneeded properties and could leave banks buried under unpaid loans.

Tags: macroeconomics, China, economics, politics, economy, growth