BEIJING: China's economy grew a surprisingly strong 7.9 per cent in the second quarter as it charged ahead of other major economies in the dash out of the global recession.
It looks set to hit its full-year growth target of 8 per cent, fuelling hope that the world economy could also be emerging from its worst crisis in 80 years.
But the government yesterday cautioned against any premature celebration, saying that the surge was unstable and uneven across different sectors and regions in the world's third-largest economy.
'Maybe many of you have actually felt and experienced this economic recovery, but some other groups, industries, enterprises have not,' said Mr Li Xiaochao, a spokesman for the state statistics bureau.
He added there were still a number of uncertainties, pointing in particular to declining external demand, which fell by 21.8 per cent in the first half of the year.
But a string of data from the government showed that the export slump had been offset by an increase in domestic demand, aided by the 4 trillion yuan (S$850 billion) stimulus package announced late last year to combat the crisis.
Mr Li highlighted the strength of China's car and property markets. In recent months, car showrooms in Beijing have reported brisk sales and long waiting lists for new cars.
But analysts said that the main push behind the growth was investment in infrastructure projects by state-owned companies, backed by record bank lending.
'We now expect total new lending in 2009 to reach 9 trillion yuan, a speed of re-leveraging unprecedented in China's history,' said economist Wang Tao, head of the UBS Securities' China economic research.
Experts, who had forecast 7.5 per cent growth for the second quarter, have now raised their projections for the full year.
Most are now looking at 8.2-8.5 per cent annual growth, a far cry from just a few months ago, when predictions of 8 per cent were seen as wildly optimistic.
'China's recovery is real, strong, and sustainable,' said Merrill Lynch economist Lu Ting.
The 8 per cent growth target has taken on almost mythical importance in Chinese economics and politics, with the Chinese Communist Party believing that it is the rate of growth required to create jobs and wealth to keep the country stable.
The party has been repeating the 'Protect 8' mantra in the past six months, as it looks ahead to the planned massive 60th National Day celebrations on Oct 1.
Major incidents of social unrest have erupted this year, with the July 5 riots in Xinjiang seen as the worst in decades.
The rebound would give the government confidence that the economy has turned a corner, especially after it overtook Japan as the world's second-largest stock market by value on Wednesday.
The Shanghai Composite Index closed down 0.15 per cent yesterday, after shares stayed in positive territory for most of the day following the announcement of the 7.9 per cent growth.
Source: Straits Times, 17 July 2009