Originally created 04/16/04

China says its booming economy grew 9.7 percent in first quarter of year



SHANGHAI, China -- China said Thursday its economy expanded 9.7 percent in the first three months of this year, beating expectations and fueling worries about possible inflation.

Driven by surging investment and strong domestic demand, gross domestic product in the first quarter of the year totaled 2.71 trillion yuan ($328 billion), the National Bureau of Statistics said.

Investment in construction and factory equipment, a key government concern, soared 43 percent over the same period a year earlier to 879.9 billion yuan ($106.5 billion), the bureau said.

The government has been tightening credit in an attempt to curb bank lending that fuels such investments - considered a key indicator of economic growth.

The January-to-March jump in GDP exceeded analysts' forecasts of a 9.2 percent increase. It is likely to heighten concerns that the economy may be overheating.

China's economy expanded 9.1 percent in 2003 and 8.0 percent in 2002.

Top leaders set this year's growth target at 7 percent, saying the sizzling growth rates of the past few years were unsustainable.

The central bank has tightened the country's money supply by ordering banks to increase their financial reserves, which reduces the amount available for lending.