China's booming economy grew at an annual rate of 10.2% in the first quarter, picking up from last year's already breakneck pace to spark a fresh warning the pursuit of growth for its own sake could lead to problems.
The expansion in the first three months, announced today by the National Bureau of Statistics, came on the back of massive increases in investment in factories, bridges and other fixed assets.
Fixed asset investment in the first quarter was up 27.7% from a year earlier, the NBS said. That compared with 25.7% growth for all 2005.
Analysts said that rapid growth in fixed asset investment and bank loans were 'prominent problems' that have to be addressed, echoing President Hu Jintao's weekend warning on the risks of too high a growth rate.
China's economy expanded by 9.9% in 2005 and the government, hoping to switch the focus to domestic consumption away from exports, had earlier set a more modest goal of about 8% growth for 2006.
However, other data such as inflation suggested no signs of overheating in the Chinese economy. The consumer price index rose 1.2% in the first quarter. In urban areas, prices increased 1.2% and in rural areas they were up 1.1%. Inflation in 2005 came in at 1.8%.
China's industrial output, from sweatshops to its massive factory floors across the vast nation, climbed 16.7% in the first quarter, largely in line with previous figures and suggesting no imminent break out.
The figures indicated again, however, that China's economy continued to be driven by the twin engines of investment and exports, while consumers in the world's most populous country remain cautious spenders.
Exports increased 26.6% in the first quarter, the NBS said, reflecting China's status as the factory of the world. Retail sales, the main indicator of consumer spending, rose 12.2% but that figure, while impressive by most nation's standards, does not reflect the real potential of the Chinese consuming public, analysts say.
China's 1.3 billion people instead continue to put too much money in the bank because of a weak social safety net and fears for the future. Until they get more confidence about their education, healthcare and retirement benefits, they are unlikely to change their ways and the economy will continue to rely largely for growth on exports.
