Chinese Economy Grows Even More Than Expected
Chinese Economy Grows Even More Than Expected | ||
The stellar figure is due to a virtuous cycle of an enormous trade surplus thanks to increased exports leading to investment in production facilities, which in turn boost exports. Another factor is investment worth more than US$60 billion a year by foreigners who bet on continued high growth spurred by the Beijing Olympics next year. China's trade surplus has kept up a stunning pace this year. During the first half, the trade surplus rose $112.5 billion, up a whopping 83.1 percent from the corresponding period last year. If the trend continues, China will overtake Germany at the end of this year to enjoy the world's largest trade surplus and become the world's second largest exporter after Germany. Wang Xinpei, a spokesman for the Chinese Ministry of Commerce, predicted a sustained increase in exports. "No matter how tough our trade balance policy, the world market wants Chinese goods,” he said. China's foreign currency reserves have increased this year at a rate of $1.02 million per minute. Foreign currency holdings increased by $266.3 billion during the first half of the year, more than South Korea's total reserves of $250.7 billion. China has also overtaken advanced countries in terms of GDP. In 2005, China overtook the U.K., ranking fourth after the U.S., Japan and Germany and is poised to claim Germany’s third rank next year. But behind the facade of high-speed growth, China suffers from soaring consumer and real estate prices. Commodity prices will likely increase 4 percent in June, higher than the 3 percent target figure set by the government. Housing prices in large cities like Shenzhen have risen by as much as 50 percent this year alone. The Beijing has raised the interest rates twice in a bid to prevent the economy from overheating. But it is inevitable for China to tighten its monetary policy, including scrapping taxes on interest income and hiking interest rates further. |
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