China's economic growth surged to 11.9 percent in the first quarter, prompting renewed calls for tighter policies to prevent the world's third-largest economy from bubbling over. The following are the comments from several overseas media.
The rate of expansion, the fastest since 2007, was flattered by a low base of comparison a year earlier, when the economy was reeling from the global financial crisis.
But economists said the figures, released on Thursday by the National Bureau of Statistics, were unquestionably sturdy and would justify a firmer policy stance to nip inflation in the bud.
"We think in absence of a dramatic fall in external demand, it is critical for the government to tighten policy more decisively than they have been doing in order to prevent overheating," Goldman Sachs economists Yu Song and Helen Qiao said in a note to clients.
However, not all economists said it was urgent for Beijing to slam on the brakes. They noted that the government is already winding back its anti-crisis investment spending and has ordered banks to reduce new lending by more than 20 percent in 2010. "While we expect policy tightening over the coming quarter, there is no need for dramatic measures," said Mark Williams with Capital Economics in London.
The strong performance reported Thursday might allow a loosening of politically volatile currency controls by offsetting possible losses in export industries. Analysts expect Beijing to let the yuan rise sometime this year, though President Hu Jintao and others have rejected U.S. and other foreign pressure for a change, saying China will move at its own pace.
Inflation stayed low at 2.2 percent, below the government's target of 3 percent for the year, easing pressure for immediate interest rate hikes or other steps to cool the boom. But analysts said Beijing needs to act soon to head off mounting pressure for prices to rise.
"The tightrope is between pulling away stimulus which is still supporting the economy and tightening quickly enough to keep prices from getting out of control," said Tom Orlick, an analyst in Beijing for Stone & McCarthy Research Associates.
China's economic growth accelerated to the fastest pace in almost three years in the first quarter, highlighting overheating risks that may prompt the government to scrap the yuan's peg to the dollar.
A lower-than-estimated gain in consumer prices complicates a debate in Beijing on when to raise interest rates, cut in 2008 to counter the financial crisis. Australia and India have already moved and Singapore yesterday allowed a one-time revaluation of its currency as the region winds back stimulus policies to limit asset-bubble and inflation risks.
"The next policy move remains likely to be a yuan revaluation," said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. Inflation data may lead the central bank to delay an interest-rate increase until the second half of the year, he said.
China's economy grew a blistering 11.9 percent in the first quarter, increasing pressure on Beijing to raise interest rates and loosen controls on its currency.
Gross domestic product in the world's third-largest economy maintained double-digit growth for the second straight quarter after expanding 10.7 percent in the last three months of 2009.
The number was boosted by a low base effect last year when the economy grew 6.2 percent, the slowest pace in more than a decade.
Growth in the March quarter was the fastest since the onset of the global slump and well above Beijing's target of eight percent for this year, which is seen as crucial in creating enough jobs to stave off social unrest.