Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Chinese economy still red hot

china_construction.gi.top.jpg By Annalyn Censky, staff reporter

NEW YORK (CNNMoney) -- China's economy accelerated at the end of 2010, but kept inflation in check, showing the world's second largest economy is still outpacing its Western trading partners by leaps and bounds.

China's gross domestic product, the broadest measure of economic output, grew at an annual rate of 9.8% during the fourth quarter of 2010, up from 9.6% growth in the prior quarter, according to figures from the National Bureau of Statistics released Thursday.

That rate is considered very rapid compared to sluggish growth in Western economies. The U.S. economy grew at a snail's pace of 2.6% in the third quarter.

While China's rapid growth has sparked fears that its economy may overheat, a rate around 10% is not unusual in the country's history over the last 30 years. And the latest inflation data, also released Thursday, doesn't point to out of control prices either, economists say.

"Growth remains very robust in China," said Jay Bryson, global economist with Wells Fargo. "But I don't know if the economy is overheating. When you have non-food price inflation of 2.2%, that's pretty low in the grand scheme of things."

Explosive retail sales helped drive economic growth, surging 19.1% in December, after increasing 18.8% the month before.

"This helps confirm our long-held view that China is starting to experience a consumption boom, which should last for many years," Nomura economists Chi Sun and Tomo Kinoshita said in a research note.

The Chinese government also released its latest inflation data on Thursday, showing that prices rose at a slower pace in December.

China's Consumer Price Index rose 4.6% in December, after rising 5.1% the month before, according to government data. Food prices rose at an annual pace of 9.6%, down significantly from a 11.7% pace in November.

The Chinese government had recently taken steps to curb rapid inflation in the country, as surging food prices there have hurt the purchasing power of its citizens.

But at the same time, wages are still rapidly growing and fueling inflation to spread to broader areas. Non-food inflation was 2.1% in December, up from 1.9% the month before.

"High CPI inflation expectations and strong growth should encourage authorities to accelerate their tightening of monetary policy in coming months," Sun and Kinoshita said.

The latest data comes amid an important meeting between President Obama and Chinese President Hu Jintao at the White House.

In a press conference Wednesday, Obama said it is important to remember that while China's economy is rising rapidly, the U.S. economy is still three times its size, with a mere quarter of the population.

He also tried to calm fears that the U.S. is trying to limit China's growth.

"We welcome China's rise," he said. "We just want to make sure that rise occurs in a way that reinforces international norms and international rules, and enhances security and peace, as opposed to it being a source of conflict either in the region or around the world."

American leaders, including Obama, are pushing for a stronger trading relationship with China, as a way to boost the U.S. economy and create more jobs at home. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.92%3.92%
15 yr fixed2.99%2.98%
5/1 ARM3.26%3.12%
30 yr refi4.01%3.98%
15 yr refi3.08%3.04%
Rate data provided
by Bankrate.com
View rates in your area
Find personalized rates:
Index Last Change % Change
Dow 17,798.49 -14.90 -0.08%
Nasdaq 5,127.53 11.38 0.22%
S&P 500 2,090.11 1.24 0.06%
Treasuries 2.22 -0.01 -0.31%
Data as of 11:44am ET
Company Price Change % Change
General Electric Co 30.36 0.00 0.00%
Bank of America Corp... 17.48 0.04 0.23%
HP Inc 12.61 -0.03 -0.24%
Pfizer Inc 32.79 -0.08 -0.24%
Walt Disney Co 115.13 -3.54 -2.98%
Data as of Nov 27


Sumner Redstone, the media mogul who controls Viacom and CBS, is at the center of a legal dispute. One side says he is practically unable to make decisions for himself. The other says he is "engaged and attentive." More

Nearly six in ten black Americans surveyed by CNN/Kaiser Family Foundation say that they or a close friend or family member have been incarcerated -- and a majority of them come from low-income households. That leaves the many families of inmates in a precarious financial situation. More

Watsi crowdfunds donations to cover healthcare costs of those in need. And it's seeing a surprising trend: micro-donations via the popular Chinese social networking app, WeChat. More

Hive, a startup funded by the UN, is tasked with getting more Americans engaged with the refugee crisis. More

Shoppers around the country braved the crowds to get their hands on the best Black Friday deals. More