China's Economic Growth Accelerates Amid Stimulus

In this Saturday, July 11, 2009 photo workers dismantle scaffolding as residential buildings are...

In this Saturday, July 11, 2009 photo workers dismantle scaffolding as residential buildings are seen behind 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/Greg Baker)

(AP)

Chinese leaders are believed to have picked the 8 percent growth target partly because it is the fastest rate at which the economy can expand without igniting pressure for prices to rise.

Beijing's stimulus aims to reduce reliance on exports by boosting domestic consumption through higher spending on construction of highways and other public works. Most of the money has gone to state-owned construction and steel companies, but it is starting to flow to the private sector as builders hire workers and buy other materials.

Industrial output rose 10.7 percent in June from a year earlier, faster than May's 8.9 percent growth, the statistics agency said. It said retail sales rose 15 percent in the first half from a year earlier, while first-half spending on factories and other fixed assets was up 33.5 percent.

Related

Former Chinese Oil Executive Convicted of Graft

Rio Detentions Complicate China Iron Ore Talks

Reports: China Probes 5 Steelmakers in Rio Case

The wave of positive data in recent weeks has encouraged investors, driving a stock market boom that has boosted China's benchmark Shanghai Composite Index by 75 percent since the start of the year.

The latest rise in quarterly growth "indicates that the country is on course to achieve its growth target for the year," said Jing Ulrich, JP Morgan & Co.'s chairwoman for China equities, in a report to clients.

Li, the government spokesman, said Beijing is closely watching prices to make sure its stimulus and rapid growth in bank lending and investment do not ignite inflation.

"There are still quite a lot of uncertainties," the spokesman said. "We should remain watchful about changes in prices."

———

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

———

On the Net:

National Bureau of Statistics (in Chinese): http://www.stats.gov.cn

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.