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China's Economy Grew 10.3% In 2010

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China's gross domestic product (GDP) grew a faster-than-expected 10.3% in 2010, official statistics show.

GDP figures for the fourth quarter also defied expectations of a slowdown, with an increase to 9.8% from 9.6% recorded.

But inflation eased to 4.6% in December from a 28-month high of 5.1% the previous month, as food price pressures eased. Inflation for 2010 was 3.3%.

Aware of the unrest sparked by past periods of high inflation, China's leaders make curbing it a priority.

They have raised interest rates twice in the past four months and raised banks' required reserves in a bid to control food and housing costs.

Analysts say the apparent easing of inflation reflected a relatively low base the year before, and that the government needs to do more.

The huge sums of money pumped into the world's second largest economy by state-run banks are hindering moves to bring inflation under control, they add.

It's a miracle, and luckily the Chinese banks haven't possible been faking credit.

However don't many commentators consider inflation to be a lot higher than official figures so all the growth could merely be inflation.

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I was reading an update on this recently and it pointed out the divergence between China's money supply growth and its economic growth and warning about the difference.

The broad M2 measure of money supply grew by 19.7 % which exceeded the official target of 17 % by 2.7%. So we can look at this two ways firstly if we look at the level of broad money growth as an absolute we can see that 19.7% is an extraordinary level of growth for a broad money aggregate on its own flashing an amber warning light. However monetary growth needs to be compared with actual economic growth and again according to official Chinese statistics this was revised up to 9.2% for 2010 as a whole this morning. If we use the measure of monetary growth minus economic growth we get 10.5% which turns the amber light to a red one. If one needed a further influence you could say that reported economic growth of 9.2% for a single year flashes its own warning signal.

I guess as figure emerge like todays this article is being proved to be correct.

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