Friday, January 21, 2011

Fears of China's Economy Overheating Grow, Inflation Rampant

Concerns the Chinese economy is overheating mounted after offical figures revealed the economy grew faster than expected at the end of last year and inflation remained above target.

Meanwhile, Guangdong added to the fears after China's biggest provincial economy increased its minimum wage by 18 to 26 per cent, the second big increase in less than a year.

The national economy expanded at an annual rate of 9.8 per cent in the final quarter of 2010, and grew 10.3 per cent for the entire year.

Consumer price inflation, a growing worry for policymakers, fell to 4.6 per cent in December from a more than two-year high of 5.1 per cent the previous month.

However, analysts said the moderation was mostly due to a high base the year before, and that prices would accelerate strongly in the first quarter of this year, complicating efforts to cool the economy without triggering a sharp slowdown.

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