China’s Economy Kicks On Into 2011

Those who believe that China’s economy won’t slow in 2011 by as much as consensus forecasts, including this Bystander, see confirmation of that belief in the latest GDP figures. The economy grew at a faster than expected 9.8% year-on-year in the fourth quarter, giving a 10.3% GDP growth rate for the year as a whole, the National Bureau of Statistics says. That is up from 2009’s 9.1% and ahead of the widely forecast 10%.

To our eye that gives the economy some significant momentum going into this year, particularly from investment spending. Fixed asset investment rose by 23.8% in 2010, down from 2009’s stimulus-fueled 30% growth but still a substantial number despite a raft of measures being introduced to rein in the capital funding property investment. These constraints will be tightened further as the year progresses, mainly through more interest rate rises and higher capital reserve requirements being imposed on banks, but they won’t slow the momentum of the heavy investment spending to the extent needed if consensus growth forecasts of 8.7%-9% for 2010 are to be met.

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One response to “China’s Economy Kicks On Into 2011

  1. Pingback: China’s Open Throttle | China Bystander

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