China’s Second Quarter Economic Growth Rate Accelerates

By Stephanie Ho

BEIJING (RPRN) 7/16/2009–China’s economic growth rate rose in the second quarter of this year, in part because of a surge in spending by the state and consumers. The world’s third largest economy expanded by 7.9 percent April through June, compared with a year earlier.

The growth rate, released Thursday by China’s National Bureau of Statistics, is up from 6.1 percent in the first quarter, when exports tumbled to their lowest point in a decade.

Despite the improvement, spokesman Li Xiaochao warns that a full-fledged recovery for the Chinese economy is not yet firmly established.

Li says the difficulties and challenges in the current economic development are still numerous. He says the basis of the rebound of the people’s economy is not stable.

The faster growth came despite a plunge in China’s trade and foreign investment since late 2008. Many analysts credit China’s nearly $600 billion stimulus plan, which focuses largely on infrastructure projects, for helping to reassure Chinese consumers.

Consumer prices in June fell almost two percent from a year earlier. Li says Beijing is closely watching prices to make sure its stimulus plan and rapid growth in bank lending do not ignite inflation.

Retail sales rose 15 percent in the first half of the year, from a year earlier, while spending on factories and other fixed assets was up more than 33 percent in the same period.

Industrial output rose almost 11 percent in June, from a year earlier.

Some economists expect China to be the first major country to rebound from the global economic crisis.

The World Bank and the International Monetary Fund both recently raised their forecasts for China’s 2009 growth from an original estimate of 6.5 percent.

The World Bank now forecasts growth of 7.2 percent, while the IMF expects 7.5 percent growth.

The Chinese government has set a target of 8 percent growth for the entire year. Authorities say this amount of growth is necessary to ward off massive unemployment.

Photo credit: File, Wikipedia

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