China's GDP Grows 7.9% in Q2

BEIJING, July 16 -- The Chinese economy expanded 7.9 percent year on year in the second quarter, as massive pump-priming and record lending pushed for a rebound from the worst growth in a decade, official data showed Thursday.

    The figure is within the market expectation between 7.5 percent and eight percent.

    The gross domestic product (GDP) grew 7.1 percent from the same period a year ago to 13.99 trillion yuan (2.06 trillion U.S. dollars) in the first half, said Li Xiaochao, spokesperson with the National Bureau of Statistics (NBS) at a press conference.

    Analysts said it adds confidence that China will achieve the full-year growth target of eight percent.

    The world's third largest economy tumbled to 6.1 percent in the first quarter as exports shrank to a decade low.

    Li said positive factors are increasing as the economy is on the road to recovery, but also noted the revival is not on solid footing, and the recovery momentum is not stable. Many uncertainties remain.

    China's consumer inflation fell 1.7 percent year on year in June, representing the worst contraction since October 2002. The inflation index at wholesale level dropped 7.8 percent, the lowest in a decade.

    However, bank lending hit a record 7.37 trillion yuan in the first half, as the government looked to a moderately easy monetary policy to support economic recovery.

    Li said the consumer prices are falling and the domestic demand remained inadequate, and the economy is still plagued by overcapacity.

    He said international price changes have big impact on domestic prices, and the government will closely watch for price fluctuations to prevent inflation risks.

    Since last November, the Chinese government has adopted a series of stimulus measures including a 4-trillion yuan investment package, tax cuts, and consumer subsidies to maintain growth and employment.

    The government has set a full-year GDP growth target at eight percent, a level which is rare in the developed economies, but is the minimum to maintain full employment in a nation with a population of 1.3 billion people.

    Li said the stimulus package was the reason the intensity of the economic rise is building up.

    Benefiting from the massive government spending in the construction of railways, roads and infrastructure, the fixed asset investment rose 33.5 percent in the fist six months, the most in five years.

    The industrial output rose 10.7 percent last month, and the figure for the first half was 7.0 percent. Retail sales climbed 15.0 percent during January-June.

    Earlier this month, the International Monetary Fund raised its forecast of China's 2009 growth by one percentage point to 7.5 percent. The World Bank also adjusted its figure from 6.5 percent to 7.2 percent.

    (Source: Xinhua)