China Beats Analyst Predictions

By Stewart Douglas

China has released figures reflecting an improved level of economic growth on predictions for the year 2006.

The super-charged Chinese economy grew well beyond economic analyst forecasts throughout 2006, making it a strong contender for Germany’s third place spot in terms of world rankings over the coming years.

China has seen widespread economic benefits through increasing exports, thanks to a lower cost of production and labor than Western economies. 

The Chinese economy is thought to have grown by 11.1 percent in 2006, figures from the National Bureau of Statistics show - an increase from their previous figure of 10.7 percent. 

These figures show a startling economic growth in the region, growing at a rate far beyond that of any other world economy.

However, economists believe Beijing could be in for problem times should such rapid expansion continue, prompting calls for interest rate increases to tame the growth.

With an increase in available income, the Chinese population are becoming more affluent leading to inflation and driving down the value of the Yuan. 

However, it is hoped through interest rate rises incomes can be depressed to keep inflation under control.

The economy is forecast to grow by 10.8% over the next year, making the fifth consecutive year of beyond 10% growth for China.  These forecasts are also inline with predictions from outside Beijing, including World Bank forecasts.

Meanwhile, China’s trade surplus grew to almost $30 billion through June, a factor also considered in prompting inflation-control measures.  In addition, Chinese reserves have risen to $1.33 trillion, highlighting the dramatic turnaround in fortune for the Chinese economy post-Communism.

Experts predict that over the course of the next fifty years, China and Asian neighbor India will grow to become the two major players in the world economy, with the European super-powers of today falling by the wayside to the rapid economic expansion in these emerging markets.