China overtakes Britains Economy!

By Kevin Yao and Jason Subler
BEIJING (Reuters) - The juggernaut that is China's economy expanded 9.9 percent in 2005, beating market expectations and setting the stage for what officials say is likely to be another year of powerful growth.

Following growth of 10.1 percent in 2004 and 10 percent in 2003, the National Bureau of Statistics said last year's performance boosted the income per head of China's 1.3 billion citizens to $1,700, making the country richer than Morocco.

The data also means China, with output of $2.23 trillion, has overtaken France to become the world's fifth-largest economy and might also have leapfrogged fourth-placed Britain, depending on growth rates and currency changes in 2005.

China has kept growing strongly despite cooling measures by the government including credit curbs, tougher enforcement of planning laws and a currency revaluation.

"The economy is like a supertanker," said Stephen Green, an economist with Standard Chartered Bank in Shanghai. "All these things should slow the economy down. But as a supertanker, it's got so much momentum behind it."

Investment, covering everything from apartments to art centres, contributed a whopping 48.8 percent of 2005 growth.

Consumption, which the government is furiously trying to stimulate, accounted for 33.3 percent of the increase in GDP and trade 17.9 percent.

Statistics bureau chief Li Deshui said action was needed to brake headlong investment and avert the risks of overcapacity, which could lead to a fresh crop of bad loans, a serious waste of resources, bankruptcies and rising unemployment.

But barring policy mishaps, China's prospects were bright.

"Looking into the year 2006, the global economic environment and domestic situation are encouraging," the bureau said in a statement.

Economists agreed that China had the wind in its sails.

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