If we think India is growing fast, take a look at the numbers from China. WSJ reports that China’s 9.1% growth in 2003 (vs 8% in 2002) has pushed its per capita GDP above USD 1,000 for the first time.
Mr. Li Deshui, head of the National Bureau of Statistics, announced that the economy grew at a 9.6% rate during the third quarter…In Asia, China’s GDP growth rate is by far the highest. Second would be India, which in January said GDP grew 8.4% in the July-to-September quarter, raising hopes the country could register nearly 8% growth for its current financial year, which ends March 31.
Mr. Li and other economists warned, however, that certain industries and regions may be on the verge of overheating, which could affect prices. Industrial output accounted for nearly two-thirds of economic growth last year, with heavy industry — chiefly steel, petrochemicals and machinery-building — making up more than half of that output. Economists pointed to this as a telling imbalance in a country where the majority of the population still makes a living from farming. Also, high demand for raw materials has created bottlenecks and pushed up some costs. China now consumes one-third of the world output of coal and rolled steel. Prices for steel climbed 10% last year in China, while the prices of certain steel products jumped 26%.
Though consumer prices edged up 1.2% for all of 2003, the inflation rate appeared to be accelerating during the final months. Consumer prices rose 3.2% during December from a year earlier, and the increase in November also exceeded 3%. “The worrying thing is inflation,” said Jun Ma, a senior economist with Deutsche Bank in Hong Kong.
A second story in the WSJ writes about South Korea’s problem with household-debt which provides a warning that “doling out credit cards to boost consumer spending can juice growth in the short run, but the ultimate consequences — for financial institutions and the economy — can be dire.”