China Q1 Growth Surged to 12% but Inflation Low

China’s economic growth surged to 11.9 percent in the first quarter but inflation was lower than expected, easing pressure on Beijing to hike rates and cool the boom.

Consumer prices rose 2.2 percent compared with a year earlier, the National Bureau of Statistics said Thursday, well below the government’s ceiling of 3 percent for the year.

The data suggested Chinese leaders are succeeding in their effort to keep stimulus-led growth high while preventing inflation from spiking up. Analysts were closely watching Thursday’s data to see whether interest rate hikes or more drastic action was required to prevent overheating.

The surge in economic expansion — up from just over 6 percent in the same quarter a year ago — was supported by a 19.6 percent rise in industrial output over a year earlier and a nearly 26 percent rise in investment in factories and other fixed assets.

The latest growth rate was up from 10.7 percent in the final quarter of 2009.

Chinese leaders face a challenge in checking inflation and curbing reckless, stimulus-fueled spending on unneeded factories and other assets that could leave a mountain of bad debts.

Beijing raised fuel prices Wednesday in a show of confidence about its ability to keep inflation in check.

SHANGHAI (AP)