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Domestic demand sends China's economy in fast lane

Published: 2010-11-02    Views:62 reads

 

Brief: Industrial production expanded at the fastest pace in six months in October, indicating the world's second largest economy has weathered the global slowdown much better than others, powered largely by rising domestic demand and infrastructural investment.

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Industrial production expanded at the fastest pace in six months in October, indicating the world's second largest economy has weathered the global slowdown much better than others, powered largely by rising domestic demand and infrastructural investment.

A purchasing managers' index released by China's logistics federation rose to 54.7 percent from 53.8 percent in September, with input prices climbing the most in six months.

The HSBC Holdings Plc put China's October PMI index even at 54.8 percent, telling China's economy is powering ahead with full steam. Most analysts have estimated that the country may secure growth of 10 percent for 2010 and at least 9 percent next year.

"Economic activities remained strong, while inflation pressures continued to mount," The Bloomberg quoted Liu Li-Gang, a Hong Kong- based economist at Australia & New Zealand Banking Group Ltd as saying yesterday. "Inflation is far from peaking, which could invite another interest-rate hike by December."

The Shanghai Composite Index closed 2.5 percent higher Monday, after climbing 12 percent last month as the best global performer.

China's economic growth quickened pace in the third quarter from the second, the People's Bank of China said earlier in a statement.

Inflows of money from abroad are complicating management of the economy after a record expansion in credit in 2009 that added to asset-bubble risks. Inflation accelerated to 3.6 percent in September, the fastest pace in 23 months, and property prices have made record gains this year.

It is widely estimated that inflation might increase to nearly 4 percent in October. The National Bureau of Statistics is expected to release the official figures next week.

China's central bank raised interest rates by a quarter of a full percentage point on October 19, the first time in about three year. It severed the yuan's peg to the US dollar on June 19, letting the Chinese currency gain more than 2 percent since June.

By People's Daily Online