Summary
China's GDP growth climbed up to 11.9 percent in the 1st quarter 2010. While the high growth has triggered concerns of overheating of the economy, the rebounding is to a large extent based on a low growth base one year ago, and government stimulus programs. As the stimulus programs are running through the course, and government is tightening fiscal spending and bank lending, China GDP growth is not expected to remain as high as the first quarter for the rest of 2010.
Analysis
China's GDP growth climbed up to 11.9 percent during the first quarter of 2010, even higher than many organizations had forecasted. When investment was gradually slowing down, export returned to positive growth with average year-on-year increases of more than 30 percent in the quarter.
The 11.9 percent strong GDP growth has triggered concerns of many economists on possible overheating of the Chinese economy. Yes, we do see bubbles in the real estate sector, as bank loans, state-run companies' side investment, domestic private funds and speculative hot money flow-ins have all swarmed in. However, the Chinese economic rebounding might not be as solid and substantial as the number dazzles.
All the high growth of industrial added-values, export and GDP in the first quarter of 2010 are to a large extent based on low growth bases one year before. For the first quarter of 2009, industrial added values and GDP increased by only 5.1 percent and 6.1 percent respectively; and export plunged by 19.7 percent. In addition, large portions of investment, consumption and industrial production still rely heavily on the governmental stimulus measures.
While the stimulus programs are gradually running through the course, and central government has begun tightening fiscal spending and bank lending, investment is evidently slowing. In fact, investment growth has fallen down below 20 percent after price adjustment, compared to over 40 percent in mid 2009. Export growth could continue staying at above 20 percent for the coming months mainly because sustained declines in majority of 2009.
A slow and unsteady recovery of the global economy is not expected to provide quick and material support to the Chinese export sector. Big rebounding of heavy industries have triggered worries of surging up energy consumption and emissions. Central government is taking actions to impose restraints over high energy intensity and high emission industries. Meanwhile, increasing inflation threats are compelling government to further tighten fiscal and monetary policies.
As a result, China GDP growth is not expected to remain as high as the first quarter for the rest of 2010.
China's GDP growth climbed up to 11.9 percent in the 1st quarter 2010. While the high growth has triggered concerns of overheating of the economy, the rebounding is to a large extent based on a low growth base one year ago, and government stimulus programs. As the stimulus programs are running through the course, and government is tightening fiscal spending and bank lending, China GDP growth is not expected to remain as high as the first quarter for the rest of 2010.
Analysis
China's GDP growth climbed up to 11.9 percent during the first quarter of 2010, even higher than many organizations had forecasted. When investment was gradually slowing down, export returned to positive growth with average year-on-year increases of more than 30 percent in the quarter.
The 11.9 percent strong GDP growth has triggered concerns of many economists on possible overheating of the Chinese economy. Yes, we do see bubbles in the real estate sector, as bank loans, state-run companies' side investment, domestic private funds and speculative hot money flow-ins have all swarmed in. However, the Chinese economic rebounding might not be as solid and substantial as the number dazzles.
All the high growth of industrial added-values, export and GDP in the first quarter of 2010 are to a large extent based on low growth bases one year before. For the first quarter of 2009, industrial added values and GDP increased by only 5.1 percent and 6.1 percent respectively; and export plunged by 19.7 percent. In addition, large portions of investment, consumption and industrial production still rely heavily on the governmental stimulus measures.
While the stimulus programs are gradually running through the course, and central government has begun tightening fiscal spending and bank lending, investment is evidently slowing. In fact, investment growth has fallen down below 20 percent after price adjustment, compared to over 40 percent in mid 2009. Export growth could continue staying at above 20 percent for the coming months mainly because sustained declines in majority of 2009.
A slow and unsteady recovery of the global economy is not expected to provide quick and material support to the Chinese export sector. Big rebounding of heavy industries have triggered worries of surging up energy consumption and emissions. Central government is taking actions to impose restraints over high energy intensity and high emission industries. Meanwhile, increasing inflation threats are compelling government to further tighten fiscal and monetary policies.
As a result, China GDP growth is not expected to remain as high as the first quarter for the rest of 2010.
