China's Economic Growth Accelerates Amid Stimulus

FILE - In this July 13, 2009 file photo, Chinese women walk past a commercial shop displaying a...

FILE - In this July 13, 2009 file photo, Chinese women walk past a commercial shop displaying a poster of women have their hair styled in Beijing, China. China's economy accelerated in the second quarter amid huge stimulus spending, expanding by 7.9 percent from a year earlier as retail sales and industrial output grew strongly, data showed Thursday, July 16, 2009. (AP Photo/Andy Wong, File)

(AP)

China's economic growth accelerated in the second quarter amid a stimulus-fueled surge in consumer spending and factory output, putting the government's 8 percent full-year growth target within reach.

The world's third-largest economy expanded by 7.9 percent in the April-June period from a year earlier, up from 6.1 percent growth in gross domestic product the previous quarter, the National Bureau of Statistics reported Thursday.

"The data showed the economic recovery is stronger than expected," said Zhu Jianfang, chief economist for Citic Securities Ltd. "There will be no suspense about achieving the government's goal of 8 percent GDP growth this year."

Many analysts expect China to be the first major country to emerge from the worst global economic slump since the 1930s.

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The International Monetary Fund earlier this month raised its forecast of China's 2009 growth by one percentage point to 7.5 percent. The World Bank boosted its forecast last month from 6.5 percent to 7.2 percent.

Goldman Sachs said that compared with the previous quarter — the way other major economies measure growth — China's second-quarter growth accelerated to 16.5 percent on an annualized basis.

The government warned, however, that a full-fledged recovery is not firmly established.

"The difficulties and challenges in the current economic development are still numerous," a statistics bureau spokesman, Li Xiaochao, said at a news conference. "The basis of the rebound of the people's economy is not stable."

The faster growth came despite a plunge in China's trade and foreign investment since late 2008, reflecting China's continued dependence on its 4 trillion yuan ($586 billion) stimulus to keep the economy expanding.

Consumer prices in June fell 1.7 percent from a year earlier, the statistics agency said, giving Beijing a freer hand to keep spending on its stimulus without a danger of adding to pressure for prices to rise.