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China Says Economy Grew 8.7 Percent In 2009

(RFE/RL) -- China says it is the first country to recover from the global economic crisis -- with a surge of growth at the end of 2009 that Beijing expects to continue during 2010.

Forecasts suggest China could become the world's second-largest economy during the next year -- surpassing Japan and trailing only the United States.

Ma Jiantang, the commissioner of China's National Statistics Bureau, admits that when the number of people in his country is factored into the statistics, China still lags far behind other major world economies.

"No matter what the ranking was for the Chinese economy of the last year, the fact is our GDP per capita is behind the world's top 100. A large population, a weak economic foundation and limited resources, and a large number of people in poverty -- that is still the basic situation for China," Ma said.

For all of 2009, Ma says China's economy grew by 8.7 percent -- topping the official target of 8 percent. Economists had said that China needed a minimum growth rate of 8 percent to preserve social stability.

Looking ahead, China's strong economic performance at the end of 2009 is seen as a powerful springboard that will help lead the world out of economic recession.

Western economists say it should help drive the global recovery by boosting China's demand for foreign oil, consumer goods, and other imports.

But Ma says there are concerns among policy makers in Beijing that inflation in China could set back its economic recovery.

"The first concern is how to both maintain the pace of economic growth while also holding price rises under control. We must both maintain economic growth and also control inflationary expectations, and this is a considerable challenge," Ma said.

Western economists say continued growth could give Beijing the confidence it needs to ease China's currency controls and allow its yuan to rise against the dollar -- a move that would boost imports into China by making them cheaper for Chinese consumers.

A stronger exchange rate also would help to rebalance the global economy. China's central bank has kept the yuan currency steady against the dollar since late 2008 in order to keep its exporters competitive abroad.

Rising Yuan

So far China has resisted international pressure to let the yuan rise after the 18-month pause. But expectations are growing that Beijing will relent in coming months.

Meanwhile, a new report from the World Bank warns that the global economic recovery now under way is likely to slow during the second half of 2010 as the impact of economic stimulus programs by governments begins to wane.

The report predicts that strong growth in China will help lead the global economy out of recession during 2010 -- with world-wide GDP expected to grow 2.7 percent during the year. That compares to a global GDP decline of 2.2 percent during 2009.

But the World Bank says there is "considerable uncertainty" for 2011. It says financial markets have stabilized and are recovering, but remain weak.

Andrew Burns, the lead author of the report, says that depending on consumer and business confidence during the next six months -- and when governments end their economic stimulus programs -- growth in 2011 could be as low as 2.5 percent or as high as 3.4 percent.

"This is one of the big challenges facing developing and high income countries -- how to withdraw the fiscal stimulus, withdraw the monetary stimulus that has been put into the global economy without killing the recovery," Burns says.

Burns also says that in the next five to 10 years, countries in Europe and Central Asia that were hardest hit by the global crisis could be hit again:

"It's entirely possible in these kind of conditions -- with non-performing loans growing [and] companies that are in difficulties having trouble meeting their balance sheets -- for there to be a secondary crisis within [these] regions," Burns says.

World Bank Chief Economist Justin Lin says an overnight recovery from the crisis is not expected because it will take many years for economies and jobs to be rebuilt. He says the toll on the poorest countries -- those that rely on grants or subsidized lending -- will be "very real."

with agency reports