- The Washington Times - Sunday, April 16, 2006

BEIJING (AP) — Chinese President Hu Jintao announced yesterday that China’s economy grew faster than expected in the first quarter of the year, heightening concerns that the breakneck expansion could spark inflation and drain environmental resources.

Mr. Hu said the economy grew a stunning 10.2 percent in the first three months of this year compared with the same period last year, well above previous estimates.

Mr. Hu made his announcement days before he is to head to the United States for talks with President Bush that are likely to focus on Washington’s record $202 billion trade deficit with Beijing.

“We do not seek high-speed economic growth,” Mr. Hu said during a meeting with a former Taiwanese opposition leader in Beijing. “We are concerned about the pace of development and the quality and the effect of our growth. We are also concerned about saving our resources, environmental protection and the improvement of our people’s livelihood.”

China’s economy has grown at an annual pace of about 10 percent for the past three years. Chinese leaders worry that surging economic growth could spark inflation or touch off an investment binge into unneeded projects that will leave already debt-laden banks with more bad loans.

China’s Cabinet called Friday for new measures to clamp down on investment and bank lending to head off signs that the economy may be overheating.

The economy has consistently overshot official targets for the past several years. Perhaps partly for that reason, a government report in January did not offer forecasts for 2006.

Prime Minister Wen Jiabao and other members of the State Council on Friday called for the policy changes after examining data on the money supply and investment in buildings, factories and other fixed assets.

Among the troubling signs for the economy, the central bank said Friday that new loans in the first quarter reached $156 billion — more than half the bank’s target for all of 2006.

“The reason why the economy has grown at this pace is because of the banks’ lending terms,” said Andy Xie, an economist with Morgan Stanley in Hong Kong. “If they don’t want to economy to grow so much, they need to tighten their lending terms.”

Mr. Xie said the government might have released the numbers, which had been due to come out later this month, “to assure America that China is growing fast and that there is demand for American products.”

Mr. Bush has vowed to hold Mr. Hu accountable to fair trade practices, singling out the Chinese currency, which the U.S. says is undervalued, makes Chinese exports cheap and has contributed to the ballooning trade deficit.

Government economists had predicted between 8.5 percent and 9 percent growth for this year, in line with estimates by the World Bank and many private economists.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide