By Zhao Huanxin (China Daily)
Updated: 2007-07-20 08:43

The Chinese economy rose by 11.5 percent in the first half of 2007, continuing on a "sound and rapid" path which needs some "adjustment", officials and researchers said yesterday.

The gross domestic product (GDP) hit 10.68 trillion yuan ($1.39 trillion) in the first six months, growing 0.5 percentage points higher than a year ago, the National Bureau of Statistics (NBS) said in its quarterly release.

The GDP is expanding much faster than the year's target of around 8 percent, largely because industrial and taxation policies had spurred economic growth; and economies elsewhere in the world grew faster than expected at the onset of 2007, bureau spokesman Li Xiaochao said.

"We are keeping a close watch on what direction (China's) accelerated economic growth is taking," Li told a press conference. "But whether or not the economy is overheated is a complex issue that should be viewed from different angles."

The consumer price index (CPI), a major gauge of inflation, went up to 4.4 percent in June - a 28-month high - and 3.2 percent in the first half. But the rise of core CPI, after deducting food and energy prices, rose only 0.9 percent in the first half, he said.

Price hikes of foodstuffs, mainly grain, meat and fowl and eggs, contributed significantly to the rise of CPI, said Li. Food makes up a third of the CPI basket.

Lin Yueqin, an expert on macro-economy at the Chinese Academy of Social Sciences, said he believes the growth rate will be maintained for the full year.

Related readings:   GDP grows 11.5% in first half  Food price rise a major driving force for 1st-half CPI China capable of controlling fixed assets investment growth   GDP grows annual average of 9.67% from 1978 to 2006  GDP grows 11.1% in first quarter  NDRC predicts over 3% CPI rise for 2007  Central bank: CPI to grow 3.2% in 2007

"The country needs high growth to address issues such as unemployment," Lin said. "The crucial point is that development should consider energy and environment constraints and be based on an optimized structure."

For example, local governments should refrain from recklessly pursuing GDP growth by investing in sectors that guzzle energy and spew out pollution, he said.

The tertiary industry, where investment has been far less than in primary and secondary industries, should be further boosted, Lin said.

Li conceded that systemic and the structural problems still exist in the economy.

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