China's GDP Grows 7.9 Pct in Q2

Anchor: Official data released on Thursday shows that the Chinese economy expanded 7.9 percent year-on-year in the second quarter as the nation became the first of the major economies to rebound from the global recession.

CRI's Chen Zhe has more:

Reporter:

The National Bureau of Statistics announced that China's GDP grew 7.1 percent from the same period last year to nearly 14 trillion yuan, or about 2 trillion U.S. dollars, in the first half of the year.

Analysts said it increases confidence that China will achieve the full-year growth target of eight percent.

Yao Jingyuan is chief economist at the National Bureau of Statistics.

"Figures of the first quarter have shown signs of recovery. So people have paid special attention to the data of the second quarter because whether we can realize our target of the whole year depends on the economic situation of the first half. China's economic recovery is also significant to the world economy."

China, the world's third largest economy, saw its growth rate tumble to 6.1 percent in the first quarter as exports shrank to a decade low.

Li Xiaochao, spokesperson for the statistics bureau, says many uncertainties still remain as the economy is on the road to recovery.

"The difficulties and challenges in the current economic development are still numerous. The revival is not on a solid footing and the recovery momentum is not stable. Over the next period of time, we will continue to implement proactive fiscal policy and moderately easy monetary policy so as to continue and consolidate the rebound momentum."

Li said China's consumer inflation fell 1.7 percent year-on-year in June, representing the worst contraction since October 2002. The inflation index at the wholesale level dropped 7.8 percent, the lowest in a decade.

However, bank lending hit a record of more than 7 trillion yuan in the first half.

Peng Xingyun is director of the monetary policy division at the Chinese Academy of Social Science.

"Before this April, the increase of bank lending was mainly stimulated by government investing in projects. After April, non-government investment demand began to increase. This will play a positive role in helping China's economy to shake off the adverse impact of the global financial crisis."

Li said consumer prices are falling, domestic demand remains inadequate and the economy is still plagued by overcapacity.

He said international price changes have a big impact on domestic prices, and the government will closely watch for price fluctuations to prevent inflation risks.

Since last November, the Chinese government has adopted a series of stimulus measures, including an investment package of 4 trillion yuan, tax cuts, and consumer subsidies to maintain growth and employment.

Li said the stimulus package was the reason the economy showed growth.

Benefiting from massive government spending in the construction of railways, roads and infrastructure, the fixed-asset investment rose more than 30 percent in the first six months, the most in five years.

Earlier this month, the International Monetary Fund raised its forecast of China's 2009 growth by one percentage point to 7.5 percent. The World Bank also adjusted its figure from 6.5 percent to 7.2 percent.

Chen Zhe, CRI News.