China GDP Grows 10.7%

China’s growth rate accelerated to the fastest pace since 2007 in the fourth quarter, signaling a need to rein in credit growth that threatens to destabilize the world’s fastest-growing major economy., Bloomberg 1/20/2010 11:44:37 PM

Gross domestic product rose 10.7 percent from a year before, a statistics bureau report showed in Beijing. For the full year, GDP gained 8.7 percent.

The report may stoke speculation the central bank will start raising its benchmark interest rate and tighten restrictions on the nation’s lenders. Minutes after the release, traders said the People’s Bank of China guided three-month bill yields higher at an auction for the second time in two weeks.

The world may again this year count on China as the biggest engine of growth, with the International Monetary Fund projecting it to expand 9 percent, compared with 1.3 percent for advanced economies.

Mining company Rio Tinto Group reported a 49 percent jump in fourth-quarter iron ore output on China’s demand, while companies ranging from Ford Motor Co. and Volkswagen AG to Hong Kong billionaire Cheng Yu-tung’sNew World Department Store China Ltd. are expanding in the nation.

Retail sales rose 16.9 percent after adjusting for consumer price changes, the bureau said. The government previously said that gain was the biggest since 1986.

Fourth-quarter economic growth was driven by an unprecedented $586 billion stimulus package, subsidies for consumer purchases and a credit-fueled investment boom. The property market has rebounded and a 13-month slump in exports ended last month.

China’s 2009 GDP growth rate was down from 9.6 percent in the previous year. The statistics bureau revised its estimate of growth in the third quarter of 2009 to 9.1 percent from 8.9 percent. It changed the first-quarter figure to 6.2 percent from 6.1 percent.

China GDP Grows 10.7%