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Figures confirm China's swift economic recovery

CHINA'S economy grew at an annual rate of 10.7 percent in the fourth quarter of 2009, the fastest pace since 2007, the National Bureau of Statistics said today.

It brought gross domestic product to 33.5 trillion yuan (US$4.9 trillion) in 2009, up 8.7 percent on an annual basis, and narrows the distance between China and Japan, the world's second largest economy, which is forecast by the International Monetary Fund to have an output of US$5.1 billion in 2009.

"China has a staged a clear V-shaped recovery," said bureau head Ma Jiantang at a press conference in Beijing. "China has walked out of the uncertainties battering the country in the early months of last year and is now confident about its growth momentum."

China's industrial output expanded 11 percent year on year in 2009; fixed-asset investment jumped 30.1 percent to 22.5 trillion yuan, while retail sales advanced 15.5 percent to 12.5 trillion yuan.

China overtook Germany as the world's largest exporter last year despite its overseas shipments dropping 16 percent from a year earlier.

But last year's strong performance has fueled expectation of tighter monetary policy.

"Good news from GDP may not be that good for markets, as people may expect faster exits from stimulus measures," said Lu Ting, a Merrill Lynch economist. "Meanwhile, higher inflation numbers will likely make inflation-hedging investment strategy a popular move."

China's Consumer Price Index, the main gauge of price fluctuations, rose 1.9 percent in December from a year earlier, accelerating fast from a gain of 0.6 percent in November when the index posted its first rise in nine straight months.

The Producer Price Index, the factory-gate yardstick of inflation, also ended a 12-month losing streak in December by increasing 1.7 percent from a year earlier.

The expectation for growing inflationary pressure has prompted forecasts of a swift interest rate rise. The central bank raised interest rates on its central bank bills twice last week and asked banks to put aside more money as reserves -- both are signs of tightening polices and higher interest rates.


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