China Economy Grows 10.7% in 2006; Set to Overtake Germany as 3rd Largest Economy

China economy grew by 10.7% in 2006, at its fastest rate in a decade, moving China closer to overtaking Germany as the world's third-largest economy, according to figures issued by the government. It was the fastest growth since 1995, when the economy expanded by 10.9%.

China's total economic output last year was 20.9 trillion yuan or $2.7 trillion at current exchange rates. Germany's output was $3 trillion, but its growth rate at 2.5% was far below China's. At that pace, China's output could leapfrog Germany's and catapult it into third place in the global rankings as soon as 2008, when it will be hosting the Olympic Games. It overtook Britain in 2005. 

The world's fourth-largest economy has now grown at double-digit percentage rates for four years in a row. China has almost doubled its national output in five years.

Other Key Economic Indicators:

  • Income per head of China's 1.3 billion people now exceeds $2,000, but still very low compared to America's $42,000.
  • Chinese investment in real estate grew by 21.8% while overall investment in assets was up 24%. Retail sales expanded by 13.7%.
  • The government said this month its swollen global trade surplus jumped nearly 75% in 2006 to a record $177.5 billion, equal to nearly 10% of China's total economic output.
  • China has piled up the world's biggest foreign reserves, at just over $1 trillion at the end of December.
  • Fourth quarter growth slowed slightly to 10.4% in the three months through December, down from a decade-high 11.5% in the second quarter and 10.6% in the third quarter. 

Incomes of urban Chinese households grew 10.4% in real terms last year, while those in the countryside rose 7.4%, according to the statistics agency. The countryside in China is home to 800 million people. 


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