CHINA: Fifth consecutive year of double-digit economic growth
Updated
The latest figures on China's surging economy show it expanded by a blistering 11.4 percent last year, its fastest pace in 13 years. It was also China's fifth consecutive year of double-digit growth. But the booming economy's helping send inflation levels dangerously high.
Presenter: Sonja Heydeman
Speakers: Graham Maxton, Asian Economist and Director of the Insight Bureau; Chai Jun, College of Economics and Management, Xinjiang Agricultural University; Gaurav Datt, World Bank senior economist
HEYDEMAN: China's economy last year totalled $US3.4 trillion. The National Bureau of Statistics says growth in the fourth quarter of 2007 was 11.2 per cent, a slight moderation from 11.5 per cent in the third quarter. Growth in Asia's second largest economy was boosted by a record setting performance by the export sector and massive spending on infrastructure. Asian economist and director of the Insight Bureau, Graham Maxton, says the Chinese economy is tracking predictably.
MAXTON: They're exactly on line with all the expectations of the last few months. I mean it's a very, very high rated growth for an economy of this sort of size. But of course China's economy's been thundering along for the last few years, and they're exactly in line with most people's expectations.
HEYDEMAN: Inflation last year struck 4.8 per cent, the steepest increase in 11 years. In December, the Consumer Price Index was up 6.5 per cent. Inflation in China has been fuelled mainly by a spike in food prices, with the bureau reporting the price of meat, poultry and related products soaring 31.7 per cent in 2007. Graham Maxton says inflationary pressures are not without risk.
MAXTON: You get so many expectations and asset bubbles that build up, particularly in the property sectors, but also in commodities and in prices of food mostly. And this is something which is a bit of a surprise for most economists, that you have got this rapid rate of growth and yet for most of the last few years, and even now, the rate of growth of inflation in China has been comparatively low.
HEYDEMAN: However, the impact on food prices, especially pork, has been particularly dramatic. Chai Jun, from the College of Economics and Management, at Xinjang Agricultural University, says prices have been climbing.
JUN: Especially from October 2007, agricultural product is rising, it's rising quickly.
HEYDEMAN: Chai Jun says the result is that some people face real difficulty meeting costs.
JUN: I think so, especially some people haven't got a good salary, such as some people live in the poverty areas.
HEYDEMAN: In response to growing local concern that staple foods are becoming out of reach, the Chinese Government is keeping a temporary lid on food prices. Gaurav Datt, senior economist with the World Bank, says he's aware of the measures.
DATT: The government is basically trying to put some price controls in place, but I think there seem to be some supply issues that are important as well. I mean the demand is growing largely as a result of economic growth within China. But on the supply side, I think there seem to be some issues especially in the farm sector and it's the food prices, in particular prices of pork, that have been growing quite rapidly.
HEYDEMAN: From this week, the prices of a range of food and other basics will be monitored with any potential increase the subject of government approval. Asian economist, Graham Maxton, says the Chinese Government has tried to put the brakes on the economy, but all indicators suggest the continuation of strong results.
MAXTON: And the government have been trying to slow it down without much success it has to be said for the last few years. But I think we would see China's growth rate slowing to perhaps 9 and 9.5 per cent this year, not particularly because the government in Beijing is doing a great deal, but because the American economy is slowing and the rest of the world is slowing. And so China's export growth will slow and we'll see much less demand for its goods overseas, and so the economy will begin to slow. But 9 per cent is still going to be a very high rate of growth in an economy of this size.
