“China’s sizzling economy is likely to maintain its torrid pace, with projected growth of at least 9% during the first half of this year before government policies cool the rate to a more moderate 8% or so, a senior government economist said,” writes Charles Hutlzer in today’s Wall Street Journal.

“Momentum from the fast pace set last year – 9.1% overall and 9.9% in the fourth quarter — is carrying over into 2004, with industrial growth still strong and agricultural and service sectors rebounding from relatively sluggish growth, said Qiu Xiaohua, deputy commissioner of the National Bureau of Statistics.”

“Barring a recurrence of last year’s SARS epidemic or an unexpected shock to the domestic or global economies, growth in the first half ‘won’t be lower than 9%,’ Mr. Qiu said in an interview Tuesday, and for the year ‘will likely be higher than 8%.’ “

“Helping to temper the pace in the second half, Mr. Qiu said, are government orders to curtail investment in some of the sectors that have seen blistering growth over the past year. The steel, automobile, aluminum and coal-mining industries, for example, wracked up 60% to 80% growth last year on the back of strong demand and heavy investment, he said. While projects already under way in certain sectors will go ahead, he said new projects will face tougher scrutiny in order to bring investment growth in factories and other fixed assets down to around 20%, from 53% year-on-year in January and February.”

“Though Mr. Qiu denied the economy overall was overheating, he said a growth rate of higher than 9% can’t be sustained and that signs of economic stress are already emerging. China’s $1.4 trillion economy last year accounted for only 4% of the world economy, Mr. Qiu said, yet the country accounted for 21% of global steel consumption, 31% of coal, 50% of cement and 17% of crude oil. ‘China doesn’t have enough natural resources,’ Mr. Qiu said.”

“Such an imbalance is bound to produce inefficiencies and, Mr. Qiu said, is currently more worrisome than the other usual side-affect of high growth in China: inflation. Mr. Qiu said inflation, while creeping higher in recent months, is likely to reach about 3% this year.”

“High inflation has undermined previous booms during China’s reform era, in 1988 and in 1993. But this time around, Mr. Qiu said, the situation is different. The current rise in prices comes after more than four years of deflation, he said. China’s economy is vastly more developed, having transformed from an economy marked by shortages of food and critical industrial goods to one marked by surpluses, he said. “‘n the past China was a sellers’ market,’ he said. ‘Now it’s a buyers’ market.’ “