China posts heady first half growth


China's growth, as symbolized by the Jin Mao tower in Shanghai, stemmed in part from soaring fixed-asset investment

By Alex Frew McMillan

HONG KONG, China -- China's economy grew at 7.8 percent for the first half of the year, compared with last year, official figures showed Monday.

A leap in exports and a strong rise in retail sales contributed to the heady growth, the best in Asia.

China also spent heavily on infrastructure development, leading to a 21.5 percent climb in fixed-asset investment.

China's capital, Beijing, is experiencing a sweltering heatwave at the height of the Chinese summer.

"Just like the trend of hot weather outside, the Chinese economy is picking up now and is quite hot," Qiu Xiaohua, deputy director of the State Statistical Bureau, said in unveiling the figures.

This year likely better than last

China's gross domestic product (GDP) hit 4.55 trillion yuan ($550 billion). The growth was in line with economists' expectations.

China failed to match the rate of growth seen this time last year, when GDP rose 7.9 percent in the first half of 2001 (full story).

But Qiu stated that China's gross domestic product for all of 2002 will likely outdo last year's full-year growth of 7.3 percent.

In the quarter through June, China's GDP grew 8.0 percent. That was higher than the 7.6 percent growth in the quarter through March and a little better than forecast.

Exports rose a heady 14.1 percent for the first six months. With much of Asia suffering through deflation and recession, China's retail sales rose 8.6 percent, a sign of the much-vaunted and rising demand for consumer goods.

India sets high target

But China's official figures, including GDP, have also often been called into question. The government itself has admitted there are significant difficulties in gathering reliable data.

Though the industrialized east coast of the country is easier to track, the output of the rural regions to the west and south of China is difficult to measure accurately.

China expanded only at 6.8 percent in the last quarter of 2001. But it is still the fastest-growing economy in Asia.

In its populous rival India, prime minister Atal Behari Vajpayee says the country has set itself an "ambitious target" of 8 percent growth every year through 2007 (full story).

He said India also needs to reform its red tape and labor laws if it is to attract international interest.

Most impartial observers believe China has beaten India in the battle for foreign-direct investment, partly because it is more open to multinationals.