China maintained its record of robust growth in 2005 with an expansion of 9.9%, the government said today, putting it on course to overtake Britain
as the world's fourth biggest economy.
Fueled by booming investment and active consumer spending, China's gross domestic product rose to 18.2 trillion yuan ($2.3 trillion) last year, the National Bureau of Statistics said. The 2005 growth rate, which took inflation into account, followed an expansion of 10.1% in 2004 and 10% in 2003. The performance also matched the average growth rate of 9.9% recorded between 1993 and 2004.
Statistics bureau director Li Deshui described China's economy in 2005 as 'fairly good'. 'The stability of the economic performance was strengthened to some extent and progress was seen in more balanced development,' he said.
Analysts said China had most likely now jumped from sixth to fourth on the list of the world's biggest economies, overtaking France and Britain. In 2004, France's economy totaled $2 trillion and Britain's was worth $2.14 trillion but they recorded far slower rates of growth than China last year. On that basis, China would be in front after it officially overtook Italy when it revised its 2004 economic figures in December.
Investment remained the key growth driver, accounting for nearly half of last year's economic expansion, according to Li. Fixed asset investments, the best measure of Chinese investment spending, rose 25.7% in 2005, down slightly from 26.6% the year before.
Private consumer spending, reflected in retail sales soaring 12.9%, accounted for one third of overall growth but inflation was subdued at 1.8% increase, compared with 3.9% in 2004. However, analysts doubted the usefulness of the consumer price measure, since food items get too much weight compared with a more typical basket of goods nowadays.
Net exports accounted for the remaining 18% of Chinese growth, with a trade surplus nearly tripling to a record $101.9 billion in 2005. That, along with foreign direct investment of $60.3 billion, helped boost forex reserves at the end of 2005 to $818.9 billion, up $208.9 billion from a year earlier.
NBS commissioner Li said 2006 would be another strong year for China's economy, describing the global and domestic environments as 'encouraging'. However he said there were still many problems China's economic planners needed to address, especially in the countryside which is home to an estimated 800 million Chinese.
China overtook Italy as the sixth biggest economy in the world in December when the government said it had massively underestimated the size of its own economy, mainly due to miscalculations in the services sector. The government found that the economy at the end of 2004 was worth 16.8% or $284 billion more than previously estimated.