MercoPress. South Atlantic News Agency

China roars ahead at the fastest pace in a decade, 11.9%

China's economy expanded at its fastest pace in over a decade in the second quarter, data showed Thursday, raising expectations authorities will act quickly but not severely to stop overheating.

With inflation picking up sharply, China recorded faster-than-expected growth of 11.9% in the second quarter and 11.5% in the first six months of the year, the National Bureau of Statistics said. At the current rate of growth, China's gross domestic product (GDP) is now widely expected to overtake Germany's as the world's third-largest by the end of this year, having already topped Britain and France in 2005. Officials and analysts said authorities would try to ensure the economy moderated from a pace not seen since the heady days of the mid-1990s, but that the boom would be allowed to continue. NBS spokesman Li Xiaochao told reporters that a series of cooling measures this year, which included two interest rate hikes, had already had some impact and the government would do more. "We will continue to strengthen and improve macro-control measures," Li said at a press briefing to announce the figures. "We will continue to enhance the adjustment of the industrial structure to change the growth pattern and to enable the economy to grow healthily and quickly." Li identified a range of 'outstanding problems' in the economy. "These are the imbalance in international trade, inflation in food prices and the pressure on energy conservation and pollution reduction," he said. China announced last week that the trade surplus for the first six months of the year had soared to 112.5 billion dollars, which the bureau confirmed. Nevertheless, Li described the growth rate as 'steady', and there was no suggestion of dramatic cooling measures. Thursday's data was much stronger than expected, with most forecasts for first half and second quarter growth put at around 11%. The expansion also came off a higher base than originally thought after China last week revised up its 2006 figures to 11.1% from the original 10.7%. One concern is China's inflation rate, which rose 3.2% in the first six months of the year and jumped to 4.4% in June from 3.4% in May â€" well above the government's full-year target of 3%. China's factories also continued to speed up production, with industrial output up 18.5%, while fixed asset investment, a key measure of mostly government spending in infrastructure, rose 25.9% in the first half. Li Huiyong, an economist with Shenyin Wanguo Securities based in Shanghai, said that to prevent a further speed-up, the government would have to take more measures to cool the economy. "We expect the government will issue new policies soon," Li said. Li and other economists said one key measure that would likely be announced very soon was a third interest rate hike for the year. Aside from raising interest rates, the central bank has hiked commercial bank reserve requirements five times this year in a bid to take some of the liquidity out of the banking system and slow investment.