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government said Thursday, in a startling turnaround for the Asian
powerhouse fuelled by a massive stimulus package. Expansion in the
world's third biggest economy picked up pace again after growing by
just 6.1 percent year-on- year in the first quarter, which was the
slowest growth in more than a decade. "The economy is rebounding and
the strength of the recovery is increasing," National Bureau
Spokesman Li Xiaochao said at a media briefing to release the data.
China's gross domestic product grew by 7.1 percent in the first half
of 2009 compared with the same period a year earlier, according to
the bureau. This put China back on track to achieve its goal of 8.0
percent growth for the year, despite the impact of the global
financial crisis that hit its crucial export sector particularly hard.
However, the government warned pitfalls still lay ahead. "There are
many difficulties and challenges existing in the current national
economic performance," Li said. "The base for recovery is still
infirm. The momentum for picking up is unstable. The recovery
pattern is unbalanced and thus there are still uncertain volatile
factors." Before the global economic crisis struck, China had
experienced double- digit annual growth from 2003 to 2007 , and
again for the first two quarters of last year. To fight the downturn,
the government implemented a four- trillion-yuan (580-
billion-dollar) stimulus package in November last year that had
dramatic results. Li described the impact of the package as
"remarkable," and economists expressed similar sentiments. "China's
second quarter GDP growth beat market expectations," said Lu
Zhengwei, a Shanghai-based economist with the Industrial Bank. "It
means the country's economy has achieved a very strong rebound thanks
to continued expansionary fiscal policies and the central
government's stimulus measures." Lu said China's economy would likely
grow by 8.0 percent growth in 2009 , in line with the government's
target. The figure is generally seen as the minimum growth needed to
create enough jobs and prevent major social unrest in the nation of
1.3 billion people. "But whether the strong rebound momentum can
continue remains uncertain," Lu said. "Although private sector
investment has picked up, growth still relies heavily on the central
government's expansionary policies. Also there is no sign of China's
trade performance turning better this year." China's exports dropped
21.4 percent year-on-year in June, the government said last week,
the eighth straight monthly decline. However, China's industrial
output, which illustrates activity in the nation's millions of
factories and workshops, expanded by 9.1 percent in the second
quarter of 2009 from a year earlier, the bureau said. In June,
industrial output increased by 10.7 percent, and by 7.0 percent for
the first half of 2009. China's urban fixed asset investments, a
measure of government spending on infrastructure, rose 33.6 percent
in the first half of 2009 compared with the same period a year
earlier, the statistics bureau said. Investments in urban fixed
assets increased by 35.3 percent in June year- on-year, according to
the bureau. China's consumer price index, the main gauge of
inflation, fell 1.7 percent in June compared with the same month a
year earlier, a further decline from May' s drop of 1.4 percent, the
bureau said. However analysts said inflation could make a quick
return and prove a problem for China's economic planners. The
consumer price index grew 5.9 percent in 2008 but weakened
significantly as the global crisis slowed China's economy.
