China’s economy expanded at its fastest pace in eight years in 2004, growing at an annual rate of 9.5% despite the Beijing government’s efforts to slow down it down in order to avoid inflation.
The figure was much higher than most economists expected and was well above the official target of 8%. Inflation has been cut from a peak of 5.3% in July and August to just 2.4% last month, but there was some slowing down, industrial output grew 11.5% compared with 17% in 2003. The runaway growth came despite a full year of restrictions on investment and lending and the head of the National Statistics Bureau said it is “scary” to think what it would have been like without those controls.
Senior macro-economic analyst Zhu Jianfang, from China Securities, said: “The rebound in growth in the final three months of the year, signalled a good overall economic environment and the strong growth confirms the need for macro-economic controls.” But there are signs that the authorities are easing off their controls which included denying loans and restricting land use and some economists remain convinced that the recent slowdown in inflation is no more than a temporary lull.