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China's GDP growth stays above 11%

Its expansion has been at that level for four straight quarters.

January 24, 2008|From Bloomberg News

China's economy expanded more than 11% for the fourth straight quarter, supporting global growth even as the threat of a recession looms in the U.S.

Gross domestic product rose 11.2% in the three months ended Dec. 31, compared with 11.5% in the third quarter, the government statistics bureau said today in Beijing.

About $7.6 trillion has been wiped off the value of stocks worldwide this year on concern that a slowdown in the U.S. will spread. That is complicating efforts by China, the other main engine of global growth, to curb lending and rein in consumer prices that rose 6.5% in December, stoking social tensions.

"Tightening too much when the U.S. is heading for a recession would be a double hit for the global economy," said Wang Qing, chief China economist at Morgan Stanley in Hong Kong. "Inflation is the key challenge."

China's economy "still faces outstanding problems, including the risk of shifting from growing rapidly to overheating, and rising inflationary pressure," the government said in a statement today. "Structural problems are still prominent, growth is not efficient enough and the economic system needs further reform."

Consumer prices advanced 4.8% in 2007 from a year earlier, outstripping the Chinese government's 3% target, the statistics bureau said. Fitch Ratings forecast that inflation would average more than 5% this year.

The U.S. Federal Reserve's cut of three-quarters of a point on its benchmark interest rate increases the chances of "hot money" flooding the economy, said Yu Yongding, director of the World Economics and Politics Institute in Beijing. The U.S. interest rate cut will "have a neutralizing effect on China's tightening monetary policy."

Weaker U.S. demand has contributed to a slowing of exports from China, a manufacturing base for Motorola Inc. mobile phones and Samsung Electronics Co. TV sets.

Overseas shipments rose at the slowest pace since 2002 in the fourth quarter. Reduced export incentives, particularly on products made by polluting industries, were also a factor.

Although China's inflation cooled from an 11-year high of 6.9% in November, the pace remains more than double the central bank's annual target. Soaring costs have triggered stampedes on discounted cooking oil and eggs, price controls on staple foods and memories of the unrest before the 1989 Tiananmen Square protests and crackdown.

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