Chinese economy grew more than 10% last year

FILE: Beijing - September 15, 2006 1. Various of car factory production line Beijing - January 25, 2007 2. Wide interior of State Council Press Conference hall 3. SOUNDBITE: (Mandarin) Xie Fuzhan, commissioner of National Bureau of Statistics: "According to preliminary estimation, the gross domestic production (GDP) for the year 2006 was 20,940.7 (b) billion yuan, up by 10.7 percent at comparable prices, which is 0.3 percentage point higher than that in the previous year." FILE: Beijing - July 14, 2004 4. Various of power plant and power distribution network Beijing - January 25,2007 5. SOUNDBITE: (Mandarin), Xie Fuzhan, commissioner of National Bureau of Statistics: "Outstanding problems existing in the current economic performance include: agriculture still has a weak basis which leads to increased difficulties in the steady growth of grain production and in the continued growth of farmer income; outstanding problems still exist with the irrational relationship between investment and consumption, the imbalance of payments and excess liquidity in banking system." FILE: Changsha city, Hunan Province - June 19, 2006 6. Various of farmer sowing seed in field STORYLINE: China's economy grew by 10.7 percent last year and faces strains from a soaring trade surplus and excessive investment, the Chinese government said on Thursday, leaving open the possibility of new interest rate hikes or economic controls. The annual growth figure was China's highest since the 10.9 percent rate reported in 1995 and exceeded forecasts by most Chinese and foreign economists. Growth in 2007 should continue to be fast and stable, the commissioner of the National Bureau of Statistics, Xie Fuzhan, said at a news conference. Investment in real estate and other assets surged, while consumer spending grew more slowly, Xie reported, suggesting Beijing still faces problems in its effort to cool off an investment boom and reduce China's reliance on exports by boosting domestic consumption. "Outstanding problems still exist with the irrational relationship between investment and consumption, the imbalance of payments and excess liquidity in banking system," Xie said. Investment in real estate grew by 21.8 percent - 0.9 percentage points above 2005's growth rate - while overall investment in assets was up 24 percent, Xie said. He added that retail sales grew at an annual rate of 13.7 percent, a slightly faster rate than 2005. The government has raised interest rates twice, repeatedly tightened bank credit and imposed curbs on investment in real estate, auto factories and other projects to rein in runaway spending that it says could spark inflation or a debt crisis. China's economy also faces strains from a swelling trade surplus, which is challenging Beijing's ability to contain inflationary pressures amid a flood of export revenues and foreign investment. The government announced earlier this month that the country's global trade surplus in 2006 jumped nearly 75 percent from the previous year to a record $177.5 (b) billion US dollars. To prevent that influx of money from pushing up inflation, the central bank is draining (b) billions of dollars a month from the economy. It has piled up the world's biggest foreign reserves, which stood at just over $1 (t) trillion US dollars at the end of December. Incomes of urban Chinese households grew 10.4 percent in real terms last year, while those in the countryside rose 7.4 percent, the statistics agency said. Xie said that rural incomes are still at a comparatively low level, though he stressed that compared with China's historic poverty, this is a great leap forward. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/78bfccde6e992d77fb8b72e1ecf2c5b5 Find out more about AP Archive: http://www.aparchive.com/HowWeWork