The Tiger is Racing Ahead
'China’s economy accelerated at the fastest rate in more than a decade in the second quarter, growing by 11.3 per cent year-on-year on the back of a swelling trade surplus and rapid expansion in investment.
The surprisingly strong growth in gross domestic product, which was up by 10.9 per cent in the first half of the year, left economists divided on the likely timing of any new economic tightening measures by the central government.
Zheng Jingping, an official of the National Bureau of Statistics, conceded on Tuesday that China was experiencing “problems” with “excessive investment and liquidity and rapid credit growth,” and with the accumulation of too much foreign exchange reserves.'
The key point is marked with bold ... perhaps we (I) should stop worrying so much about emerging economies' volatile markets and economies? It is just a phase ...
But in what appeared to be an attempt to damp down expectations that fresh initiatives will be announced soon to temper the pace of expansion, Mr Zheng said overall growth was “reasonable”.
He added that time was needed to allow calming measures already in place to take effect. “It is inevitable to have this kind of growth at this stage of development,” Mr Zheng said.
Beijing has already increased reserves requirements for banks, raised lending rates by 27 basis points and introduced a slew of administrative measures to control the release of land for development.
“The central government is clear about the problems of the economy and they have adopted effective measures to deal with them,” Mr Zheng said.
The key driver of the economy remains investment, which rose by 30.8 per cent in the second quarter year-on-year, as companies ploughed their earnings back into new projects and local governments spent funds in search of grassroots growth.