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    China's GDP Growth Drops Less than Expected


    by NTDTelevision

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    China's GDP growth figures for the second quarter were released on Wednesday. The figures were the lowest in two years, but still not as low some had feared.

    Investors' fears were eased on Wednesday when official Chinese GDP figures were released.

    Figures for the second quarter of 2011 show the Chinese economy grew by 9.5 percent from a year earlier. It's the slowest pace since 2009, but not as slow as some had expected.

    China is facing lagging exports and high inflation. Yet authorities attribute much of this inflation to rising food prices brought about by severe weather damaging crops. They're confident that the economy can regain health by the end of 2011.

    [Sheng Laiyun, Spokesperson, China's Bureau of Statistics]:
    "Even though the CPI hit record-high last month, there has been a change in the index. The price growth in non-food commodities has been dropping continuously and structural changes in the index have taken place."

    To rein in inflation, China's central bank has raised interest rates three times this year.

    Brian Jackson, an emerging market strategist at the Royal Bank of Canada, thinks there could be one more interest rate rise in the second half of 2011.

    [Brian Jackson, Royal Bank of Canada]:
    "My expectation is that we will see price pressures moderate in the second half of this year, so one more rate hike should be enough at the moment."

    Future rate rises may be able to partially control inflation, but they restrict economic growth.

    And while China's GDP numbers are among the world's highest, they do not factor in the quality of investment or environmental degradation—both serious issues in China.