Fueled by strong investment, China's economy soared by a stunning 10.2 percent in the first quarter of this year, a government spokesman said in Beijing on Thursday while fanning away worries that the economy might be overheated.
Gross domestic product, the broadest measure of goods and service output, reached 4.33 trillion yuan (about US$540 billion), spokesman Zheng Jingping for the National Bureau of Statistics announced at a press conference.
"The growth seems to be on the fast side, but I want to say such a rate still falls in the range of the potential economic growth. It remains basically normal, though reaching the upper limit," he said.
"It should arouse concern, and actually has aroused our attention," Zheng added.
In an interview with Xinhua, Wang Xiaoguang, a macro-economics research fellow with the National Development and Reform Commission, said he believes the economy was largely being driven by hefty investment.
Investment in roads, factory equipment and other fixed assets totaled 1.39 trillion yuan, a sharp growth of 27.7 percent, or an increase of 4.9 percentage points year on year.
Investment in urban areas climbed 29.8 percent to 1.16 trillion yuan, while that in rural areas reached 230 billion yuan, up 18.1 percent. China is launching a massive "socialist new countryside" campaign to boost rural development, in a bid to narrow the widening urban-rural gap.
Wang said local governments arranged too many big projects in 2006, the first year for China's 11th Five-Year Development Guidelines.
He called for intensified government efforts to tighten land approval and lending. In the first three months, Chinese banks consumed roughly half of the lending target for the whole year, adding 1.26 trillion yuan of loans, up 13.98 percent from a year ago.
The State Council outlined a decision at an executive meeting chaired by Premier Wen Jiabao last Friday, to move to avert a possible economic overheating by tightening controls on fixed assets investment and money supply, but detailed plans have yet to be hammered out.
Of the first-quarter GDP, the primary industry scored 320 billion yuan in value added, up 4.6 percent; the secondary industry reaped 2.16 trillion yuan, up 12.5 percent; and the tertiary industry reported 1.85 trillion yuan, up 8.7 percent.
China's economy has grown at an around 10 percent clip for each of the past three years.
The State Council and China's central bank are fully aware of the rapid growth in bank loan during the first quarter, Zheng said.
Between January and March, Chinese banks have provided 1.26 trillion yuan in bank loans, which is more than half of the 2.5-trillion-yuan annual target, Zheng said.
He said money supply must be in line with economic development. "A rapid growth in bank loans may give economy a spur in short term. In the long run however, it may cause inflation and confusion to a healthy economy," he said.
Although the first quarter has seen a 14.7 percent rise in aggregated bank loan over the same period of last year, or 1.7 percentage points higher over the 13-percent amplitude for entire 2005, the figure is still lower than the amplitudes of 2003 and 2004, Zheng noted.
(Xinhua News Agency April 20, 2006)