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China’s GDP Growth Out Of Official Comfort Zone

Business, China, Economics
By John Richardson on 15-Apr-2010

By John Richardson

China’s first-quarter GDP (gross domestic product) growth of 11.9% – the number released yesterday by the National Bureau of Statistics – is way above the 9.5% that the chairman of a major local bank has reportedly said is the maximum the economy can sustain for the full year.

“It (too-rapid growth) will mean more duplication of construction, more excess capacity and higher waste of capital,” Guo Shuqing, chairman of China Construction Bank was quoted as saying earlier this month.

The soar-away Q1 growth was slightly ahead of predictions made in separate polls of analysts by Dow Jones and Reuters that had each predicted GDP would rise by 11.5%. China’s economy grew by 10.7% in the fourth quarter of last year.

So now the question is what further steps the government might take to rein in growth.

Can it rein in growth sufficiently to prevent too much overheating – or is there so much money sloshing around the economy that there is little that can be done in the short term?