China's gross domestic product grew 9.7 per cent in the first quarter to surpass estimates and raise further doubts over the effectiveness of Beijing's efforts to cool the economy.
The National Bureau of Statistics said today that the country's GDP, which grew 7.9 per cent in the same period last year, had reached 2,710.6 billion yuan by the end of March.
Fixed-asset investment grew a staggering 43 per cent to 879.9 billion yuan, while the consumer price index went up by 2.8 per cent, compared with 0.5 per cent in the same period last year.
Although GDP expanded less than the previous quarter's 9.9 per cent, analysts were forecasting growth of just around 9.2 per cent.
The latest data represented a setback to China's attempt to rein in runaway economic growth. Starting last summer, the Beijing government has issued persistent warnings against unrestrained bank loans and over -investment in some industries.
New figures have also shown that China's attempts to impose discipline on its banks have failed. Money supply was up 19.1 per cent in the first quarter, and loan growth rose by an annualised 21 per cent - far higher than the contraction of 13 per cent the central bank is aiming for in 2004.
Even wholly owned state banks such as the Bank of China have failed to do the central bank's bidding. Their loan growth in the first three months was up nearly 10 per cent.
The Chinese government has set the GDP growth target for this year at 7 per cent. Last year's growth was 9.1 per cent.
(Financial Times Services)