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China's Growth Outstrips Estimates

April 17, 2006|From the Associated Press

BEIJING — Chinese President Hu Jintao announced Sunday 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 hurt the environment.

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

Hu's announcement came just days before he heads to the U.S. 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," 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% for the last three years. Chinese leaders worry that surging growth could trigger inflation or touch off an investment binge into unneeded projects that will leave already debt-laden banks with more bad loans.

Hu's announcement followed a call from China's Cabinet on Friday for 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 last several years. Perhaps partly for that reason, a government report in January did not offer forecasts for 2006.

Premier Wen Jiabao and other members of the State Council called for the policy changes Friday 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.

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