Economic growth in China accelerated in the last three months of 2010 despite the government’s recent fiscal tightening measures aimed at keeping growth and inflation contained, according to The Wall Street Journal. During the fourth quarter of 2010 Chinese gross domestic product grew by 9.8%, which brought full-year growth to 10.3% to about $5.88 trillion, and virtually cementing China’s status as the world’s second largest economy, surpassing Japan. The strong growth largely reflects the strength of the global economy, as demand drove Chinese exports up 31% last year.
Nonetheless, the impressive growth figures are fueling concerns that the government will have to ratchet up fiscal tightening measures in order to combat inflation, but some analysts are worried that aggressive moves could threaten the strength of the growing economy. Ken Peng of Citigroup said the data “shows that the tightening done so far hasn’t had a major impact on growth,” and the consumer price index rose 4.6% in December, slowing from 5.1% the month before. Economists widely expect the People’s Bank of China to raise interest rates multiple times over the coming year.
