Editorials

An accelerating rebound

(China Daily)
Updated: 2010-04-16 08:19

Editor's note: China’s economy made a good start with high GDP growth and low inflation in the first quarter of 2010.

China's fastest economic expansion in nearly three years shows that the country is rebounding at an accelerating rate out of the worst global recession in decades.

While policymakers can breathe a sigh of relief as such a strong recovery has so far not brought about serious inflation, they have more reasons now to pay close attention to the risks of overheating.

Latest statistics indicate that China's gross domestic product (GDP) jumped 11.9 percent in the first quarter of this year over the same period last year. A relatively low base last year also made first quarter GDP growth look particularly high. Moreover, the consumer price index climbed by only 2.2 percent in the first quarter. Consumer price inflation dipped to 2.4 per cent last month from 2.7 per cent in February.

Such a good start in overall economic performance has ostensibly provided policymakers a needed window of opportunity to fine-tune the country's stimulus package and prevent it from tipping over into excess.

On the one hand, high GDP growth may enable the authorities to scale down monetary and fiscal stimulus without causing too many problems for employment. On the other hand, low inflation means Chinese policymakers still have some room for maneuver to promote related pricing reforms crucial to sustainable development.

Given that it is more than likely for economic expansion to slow and consumer inflation with nowhere to go but up later this year, policymakers should be ready to take action against emerging signs of overheating, which include sharp property price hikes and a surge in commodity prices.

(China Daily 04/16/2010 page8)