China's economy roars ahead; clamp-down likely

With inflation picking up sharply, China recorded faster-than-expected growth of 11.9 per cent in the second quarter and 11.5 per cent in the first six months of the year, the National Bureau of Statistics (NBS) said.

At the current rate of growth, China's gross domestic product is now widely expected to overtake Germany's as the world's third-largest by the end of this year, having already topped Britain and France in 2005.

Officials and analysts said authorities would try to ensure the economy moderated from a pace not seen since the heady days of the mid-1990s, but that the boom would be allowed to continue.

NBS spokesman Li Xiaochao told reporters that a series of cooling measures this year, which included two interest rate hikes, had already had some impact and the government would do more.

Li identified a range of "outstanding problems" in the economy.

"(These are) the imbalance in international trade, inflation in food prices and the pressure on energy conservation and pollution reduction," he said.

China announced last week that the trade surplus for the first six months of the year had soared to US$112.5 billion, which the bureau confirmed.

Nevertheless, Li described the growth rate as "steady", and there was no suggestion of dramatic cooling measures.

One concern is China's inflation rate, which rose 3.2 per cent in the first six months of the year and jumped to 4.4 per cent in June from 3.4 per cent in May - well above the government's full-year target of 3 per cent.

China's factories also continued to speed up production, with industrial output up 18.5 per cent, while fixed-asset investment, a key measure of mostly government spending in infrastructure, rose 25.9 per cent in the first half.

Economists said one key measure that would likely be announced very soon was a third interest rate hike for the year and that similar measures would be implemented this year, but that the government was in reality happy to see double-digit growth.

Stephen Green, senior economist at Standard Chartered in Shanghai, said that despite the huge number released on Thursday, "We expect the boom to continue; we believe it to be sustainable."

Agencies

BEIJING

Vocabulary

to expand, v: to get bigger; to increase

decade, n: period of ten years

overheating, n: situation in which so many people want to buy things that as a result prices increase quickly

inflation, n: situation when most things are getting more and more expensive

gross domestic product, n: all the money that people spend on buying things plus the money people and business invest plus the money the government spends plus the money that comes in from exports minus the money that is spent on imports

to moderate v: to control; to make something less strong; to regulate

hike, n: unwanted or large increase

to soar, v: to increase quickly to a high level

fixed asset, n: things like property, manufacturing plant, and equipment, which can't easily be changed into money

infrastructure, n: roads, airports, and water and electricity lines

sustainable, adj: able to continue for a period of time

Questions

1. Which country's economy is larger than China's?

a. Britain

b. France

c. Germany

d. Bangladesh

2. When did China experience an economic boom the last time?

a. 1990s

b. 1980s

c. 1950s

d. 1940s

3. What measure did the government take to slow down the economy?

a. VAT reduction

b. interest rate increase

c. initiating mega projects

d. introduce free schooling

4. Why does the government want the economy to cool down?

a. global warming

b. increasing crime

c. high inflation rate

d. negative trade balance

5. It is expected that China's economy will…

a. develop a crisis

b. slow down suddenly

c. grow even more quickly

d. continue to grow strongly

Synonyms

Which of the following words or phrases replace the ones from the passage best?

1. pace

a. size

b. cost

c. value

d. speed

2. raise

a. gag

b. stifle

c. muffle

d. arouse

3. sharply

a. gently

b. slowly

c. severely

d. irresistibly

4. top

a. reach

b. idealise

c. surpass

d. approach

5. hike

a. drop

b. slump

c. increase

d. stagnation

Key:

Questions: 1.c, 2.a, 3.b, 4.c, 5.d

Synomyms: 1.d, 2.d, 3.c, 4.c, 5.c

By Ajarn Horst Baelz