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Economic growth set to continue into new year

(China Daily/Agencies)
Updated: 2010-01-02 08:03

The country's economic growth looks set to accelerate into the new year, with booming factory production driving figures of a December manufacturing survey to a 20-month high.

The survey, released on Friday, also showed the rapid pace of activity pushing up costs such as labor and raw materials to a 17-month high in the country, potentially complicating efforts of officials who want to maintain growth-friendly policies without driving inflation expectations.

The official purchasing managers' index (PMI), an indicator of economic activity, jumped to 56.6 in December from 55.2 in the previous month, the China Federation of Logistics and Purchasing said on Friday.

It was the 10th consecutive month of expansion and the biggest monthly rise since March.

Zhang Liqun, a researcher with the Development Research Center of the State Council, the country's Cabinet, said the rising index suggested that the Chinese economy has further consolidated its recovery, and shows that Chinese manufacturers have gathered momentum heading into 2010.

"We expect China's strong economic growth momentum to continue in 2010, with the major source of growth coming from a broad-based improvement in private consumption and further strengthening in private housing investment, with a solid recovery in exports," Jing Ulrich, chairman of China equities at JP Morgan in Hong Kong, said in a research note.

Chinese demand has given a welcome boost to economies of many neighboring Asian countries over the last year, as the region's traditional Western markets remain weak.

South Korea, Asia's fourth-largest economy, said on Friday that its exports to China between Dec 1 to 20 were up 74.4 percent to $54.23 billion, while exports to the United States in the same period grew only 8.7 percent to $19.04 billion.

A number of analysts expect China's economy to grow more than 9 percent in 2010, increasing worries that deflation experienced through most of 2009 will quickly flip to inflation.

However, the State Council Development Research Center said in a report on Friday that China's gross domestic product will expand by 9.5 percent in 2010 thanks to robust real estate investment and mild inflation.

China's economy shot back to nearly double-digit growth in 2009 after nearly standing still at the end of 2008, giving a lift to Asia and countries such as Australia, which have been able to feed its voracious appetite for commodities.

The country's 4-trillion-yuan ($586 billion) stimulus package, complemented by a record surge in bank lending, propelled the economy to 8.9 percent year-on-year growth in the third quarter of last year and put it on track for even faster expansion this year.